magellan rx management medical …...medical pharmacy allowed amount pmpm by lob by site of service...

MEDICAL PHARMACY TREND REPORT™

M A G E L L A N R X M A N A G E M E N T

2 0 1 6 S E V E N T H E D I T I O N

I n t roduc t ion

02 Introduction

03 Executive Summary

07 Trend Drivers

07 Category Landscape

09 Drug Landscape

12 Other Cost Drivers

14 Medical Benefit Utilization

05 Medical Benefit Drug Trend

01 Introduction

Table of Contents

63 2016 Drug Approvals

64 Medical Benefit Pipeline

66 Specialty Pipeline Forecasting

Medical Benefit Drug Pipeline63

67 The New Administration

67 Health Insurance Marketplace in 2017

68 Physician Payment and Payment Reform Updates

69 Biosimilars Payment Policy Update

69 340B

Legislative Trends67

71 2016 Report Methodology and Demographics

73 Medical Benefit Drug Trends Supplement

77 Medical Benefit Market Share Supplement

81 Medical Benefit Landscape Trends Supplement

87 Glossary/Notes

Appendix71

15 Oncology

19 Oncology Support

23 Biologic Drugs for Autoimmune Disorders

27 Immune Globulin (IG)

31 Ophthalmic Injections

35 Rare Diseases

39 Viscosupplementation

15 Medical Benefit Category Profiles

43 Product Preferencing

45 Utilization of Management Tools

46 Prior Authorization and Post-Service Claim Edits

49 Member Cost Share

49 Benefit Design

51 Variable Member Cost Share

52 Rebates

43 Medical Benefit Drug Management

54 Provider Reimbursement — Commercial

55 Provider Reimbursement — Medicare

56 Administrative Code Reimbursement

57 Biosimilar Reimbursement Strategy

58 Alternative Payment Models

59 Hospital Acquisitions of Office-Based Practices

60 Oncology Landscape

61 Health Information Data

53 Medical Benefit Provider Landscape

M A G E L L A N R X . C O M1 M A G E L L A N R X M E D I C A L P H A R M A C Y T R E N D R E P O R T | 2 0 1 6

We are excited to present a redesigned and more comprehensive report that we expect will provide a robust picture of medical pharmacy trend and management. Changes to the report include:

• Enhanced methodology for our medical pharmacy analytics. Based on our experience and knowledge of the data, calculations for our queries were updated to more accurately reflect expanded data run out time periods, data adjustments, and removal of the ‘other’ site of service classification.

• New, comprehensive survey responses specifically about the Medicare Advantage medical pharmacy benefit.

• Current payer implementations and successes of alternative payment models and future strategies of such models.

• Initial payer biosimilar strategies and what affect biosimilars had on their overall medical pharmacy management strategies.

• A more granular view of utilization management tools to understand payer strategies, and the most common processes and criteria payers used to approve and manage medical benefit drugs.

• A deeper dive into data reporting currently in use, outcomes payers have experienced, and how these systems affected management strategies.

Our most exciting change is the introduction of category specific profiles. We chose seven medical pharmacy categories having the largest impact in 2015-2016 and examined their market share, affect on PMPM spend, top drugs, overall patient costs, and current management strategies.

We know you will find our trend report useful and unique. The topics provide valuable insight on medical pharmacy, as well as key legislative outcomes and management trends affecting the medical pharmacy benefit. This trend report is another way Magellan Rx Management gives you the tools to make smarter decisions every day for managing medical pharmacy agents.

IntroductionMagellan Rx Management is pleased to present

the seventh edition of our Medical Pharmacy Trend Report™, the only detailed source analyzing current medical benefit drug management approaches and data benchmarking.

Approximately 50 percent of the annual specialty drug spend was billed under the medical benefit in 2015.1 The FDA approved a record-setting 45 novel medications, including 6 biologics, besting its ten year average approval rate of 28 novel drugs per year.2 In 2016, the FDA approved 13 new drugs that fell under the medical benefit. Approvals included four drugs for oncology or oncology support, three drugs for bleeding disorders, and two for rare pediatric neuromuscular disorders, the first in class to treat these conditions.

With the flood of specialty biologics to the market, drugs billed to the medical benefit (provider- administered infused or injected drugs paid under the medical benefit, also referred to as medical pharmacy), continue to be cost drivers for the overall drug trend. Over the last seven years, Magellan Rx Management’s Medical Pharmacy Trend Reports have filled the gap for payers in staying informed on medical pharmacy current and evolving management strategies, market place conditions, and the medical benefit drug trend.

Aligned with previous editions, Magellan Rx Management’s 2016 Medical Pharmacy Trend Report™ was derived from two complementary sources. First, we surveyed medical, pharmacy and network directors from 49 commercial and Medicare Advantage payers representing more than 109 million covered lives. Second, we completed an in-depth analysis of commercial and Medicare Advantage health plan medical paid claims data representing utilization across all outpatient sites of service, including physician offices, home infusion providers, specialty pharmacies, and hospital outpatient facilities. Health plan claims data is reported from 2015 due to lag in medical claims data and to allow for adequate claims run out to more accurately reflect health plan spend.

You can download the full report at www.MagellanRx.com

MAGELLAN RXMANAGEMENT: MEDICALPHARMACY TRENDREPORT™2016 Seventh Edition

CONTRIBUTORSAdam WiatrowskiSenior Vice President and General Manager, Magellan Rx Specialty

Casandra Stockman, Pharm.D.Vice President, Medical Pharmacy Strategy

Kristen Reimers, R.Ph.Vice President, Medical Pharmacy Strategy

Stephanie Stevens, MPHSenior Manager, Market Research

Melina DennoSenior Manager, Underwriting

Robert Louie, R.Ph., MBAVice President, Clinical Medical Pharmacy

Jim Rebello, Pharm.D.Senior Director, Formulary Strategy, Magellan Rx Specialty

Sarah BowenDirector, Marketing

Andrew Sumner, Pharm.D.Senior Director, Medical Pharmacy Strategy

Aaron Aten, Pharm.D., BCPSDirector, Medical Pharmacy Strategy

Reta Mourad, Pharm.D.Director, Medical Pharmacy Strategy

Rebecca Borgert, Pharm.D., BCOPProduct Development Director, Clinical Oncology

PAYER ADVISORY BOARDMartin Burruano, R.Ph.Vice President,Pharmacy Services – Independent Health

Kimberly Dornbrook Lavender, Pharm.D., BCPSSenior Manager, Clinical Pharmacy– Medica

Patrick Gill, R.Ph.Director, Pharmacy Programs —Horizon BCBS

Scott McClelland, Pharm.D.Vice President of Pharmacy—Florida Blue

Johanna Melendez, Pharm.D.AVP, Pharmacy Services – Emblem Health

Neal Mills, M.D., M.B.A.Medical Director — Moda Health

Gary Tereso, Pharm.D.Clinical Pharmacist, Health New England

1. https://www.imshealth.com/en/about-us/news/ims-health-study-us-drug-spending-growth-reaches-8.5-percent-in-2015. Accessed March 2017.2. https://www.fda.gov/Drugs/DevelopmentApprovalProcess/DrugInnovation/default.htm. Accessed March 2017.

M A G E L L A N R X . C O M 2 0 1 6 | M A G E L L A N R X M E D I C A L P H A R M A C Y T R E N D R E P O R T 2

I n t roduc t ion

Executive SummaryK E Y F I N D I N G S O N T H E C U R R E N T S TAT E O F M E D I C A L B E N E F I T D R U G S I N C L U D E D :

Commercial per-member-per-month (PMPM)

year-over-year allowed amounts increased

13 percent to $23.68, while Medicare

saw a 2 percent increase to $46.01.

$46.01Medicare PMPM

$23.68Commercial

PMPM

ONCOLOGY AND ONCOLOGY SUPPORT ACCOUNT FOR

30+70+N30% 39+61+N39% $26.04 PMPM

(57% of Medicare spend)

Medicare

$11.23 PMPM

(47% of commercial spend)

Commercial

Medicare

Medicare

Commercial

OF THE TOP 10 CATEGORIES, OPHTHALMIC INJECTIONS HAD THE HIGHEST YEAR-OVER-YEAR TREND

FIVE-YEAR TREND IN SPEND 2011-2015

Since 2011, spend for the commercial medical benefit increased 55 percent. The Medicare medical benefit increased 5 percent.

55% 5%Commercial


Spend for unclassified codes as a combined category accounted for $0.45 PMPM and $0.70 PMPM in commercial and Medicare, respectively, ranking among the top 10 categories for commercial and top 20 for Medicare.

For commercial, medical-benefit drug cost is often more than double in the hospital outpatient setting versus the physician office for top categories such as autoimmune disorders and oncology support medications.

Executive SummaryK E Y F I N D I N G S O N T H E C U R R E N T S TAT E O F M E D I C A L B E N E F I T D R U G S I N C L U D E D :

10 MOST EXPENSIVE MEDICAL BENEFIT DRUGS AVERAGED

OVERALL PROVIDER LANDSCAPE

Affected eight per 100,000 medical benefit members

$268,780 annually per patient

Medicare

FOR THE TOP 25 DRUGS, THE AVERAGE ANNUAL COST PER PATIENT WAS:

$24,751 $11,063The top 25 drugs represented 61 percent of commercial and 71 percent of Medicare medical pharmacy allowed amount PMPM.

Medicare

Commercial

Affected two per 100,000 medical benefit members

annually per patient

$421,220

Commercial

For a rare disorder drug such as Soliris, over a patient’s treatment lifetime (averaged at 40 years), payers may incur more than $18 million in costs.

25

20

15

10

5

0

MIL

LIO

NS

64%

57%

33%

plan to capture NDC data over the next 12-18 months

had providers share quality and outcomes data from their medical records

implemented bundled payments or value-based contracting models for their providers

Payers% of


Medica l Benef i t Drug Trend

FIGURE 1 FIGURE 2

Percentage of Members With a Medical Pharmacy Claim 2011-2015

Medical Pharmacy PMPM Trend by Site of Service by LOB 2011-2015

Medical pharmacy continues to be a costly expenditure in healthcare. In 2015, 4 percent of commercial members (44 per thousand unique members) and 12 percent of Medicare Advantage members (117 per thousand unique members) had a drug claim billed to the medical benefit (see figure 1).

Since 2011, medical pharmacy PMPM costs increased 55 percent in commercial and 5 percent in Medicare, with hospital outpatient spend driving the largest increases in trend across both lines of business. Commercial medical pharmacy spend in the hospital outpatient setting has grown by 72 percent and medical pharmacy spend in the home infusion/specialty pharmacy setting has grown by nearly 50 percent (see figure 2 and appendix A2 for full chart).

Over the most recent year analyzed, total medical pharmacy PMPM has increased 13 percent to $23.68 for commercial and two percent to $46.01 for Medicare. The majority of commercial spend (52 percent) occurred in the hospital outpatient setting and in the physician office (55 percent) for Medicare (see figure 3).

Medical drug spend in Medicare is growing in the physician-office setting and decreasing in other sites of care. In 2015, claims in the physician office setting accounted for 55 percent of the spend, up from 49 percent in 2014. The spend in the

Medical Benefit Drug Trend

hospital outpatient setting trended down 10 percent in that same time period (see figure 3). Over the last five years, physician office spend has been variable accounting for a negative trend of 2 percent (see figure 2).

Reflective of the trend in spend, 52 percent of commercial members received their provider-administered injectable or infused drug in the hospital outpatient setting in 2015, and 74 percent of Medicare Advantage members most often received medical benefit drugs in the physician office. Commercial utilization of the hospital outpatient setting in 2015 reflects a reversal from 2014 when commercial members most often used the physician office. In spite of a six-point shift to the hospital outpatient setting in Medicare, as described earlier, the 2015 spend in this setting decreased 10 percent, suggesting a change in utilization, drug mix, and unit costs as responsible for the representative decrease in costs (see figure 4).

Commercial Medicare

2011

2012

2013

2014

2015

14%4%

14%4%

14%4%

13%4%

12%4%

2011-2015 % PMPM CHANGE

Commercial

Home Infusion/Specialty Pharmacy 48%

Hospital Outpatient 72%

Physician Office 37%

Total 55%

Medicare

Home Infusion/Specialty Pharmacy 11%

Hospital Outpatient 18%

Physician Office -2%

Total 5%


$17.23(38%)

$19.06(42%)

$10.94(52%)

$12.23(52%)

FIGURE 4

FIGURE 3

Medical Pharmacy Allowed Amount PMPM by LOB by Site of Service 2014-2015

Medical Pharmacy Site of Service Mix by Members by LOB 2014-2015

$6.77(32%)

$7.62(32%)

$3.82 (16%)

Home Infusion/Specialty Pharmacy Hospital Outpatient Physician Office


2% 17% 81%

3% 23% 74%

2014 2015

2014

2% 47% 51%

2% 52% 46%

2014

2015 2015

$20.95$23.68

$22.13(49%)

$4.04 (9%)

2014

$45.23

$25.36(55%)

$3.42 (7%)

2015

$46.01

% Change in PMPM

Overall Change in Commercial PMPM: 13%

% Change in PMPM

Overall Change in Medicare PMPM: 2%

18% -15%

12%

-10%

13%

15%

Commercial

Commercial

Medicare

Medicare

$3.24 (16%)



Category LandscapeDrug spend on the medical benefit was driven

by two high-cost specialty drug categories: oncology and biologic drugs for autoimmune disorders (BDAIDs). Six of the top 10 disease states or drug categories in commercial and five of the top 10 in Medicare came from oncology, oncology support, or BDAIDs. In total, these top 10 disease categories touch 25 per thousand commercial members and 75 per thousand Medicare Advantage members (see figures 5 and 6). A full report of all medical benefit drugs is located in the appendix (A5 and A6).

In 2015, the top 10 medical benefit categories accounted for 76 percent of commercial spend and 83 percent of Medicare Advantage spend. In 2015, for both commercial and Medicare, oncology injectable and infusible drugs led the pack in the medical benefit trend constituting $8.45 or 36 percent of spend for commercial and $19.07 or 41 percent of spend for Medicare (see figures 5 and 6).

For commercial, oncology support, comprised of four categories (antiemetics, colony-stimulating factors (CSFs), erythropoiesis-stimulating agents

Trend Drivers

(ESAs) and gastrointestinal (e.g. Sandostatin LAR)), accounted for a total of $2.78 or 12 percent of PMPM spend, the majority being spent on CSF agents. In total, commercial oncology and oncology support agents accounted for $11.23 PMPM or 47 percent of medical pharmacy spend. BDAIDs, of which there are six categories (Crohn’s Disease (CD)/ulcerative colitis (UC), psoriasis/psoriatic arthritis, rheumatoid arthritis (RA), systemic lupus erythematosus, ankylosing spondylitis, and other), accounted for $3.55 or 15 percent of PMPM spend, the majority of which was in CD/UC.

In Medicare, oncology support totaled $8.45, or 36 percent of PMPM spend, again mainly in the CSF category. In total, oncology and oncology support accounted for $26.04 PMPM or 57 percent of medical pharmacy spend in Medicare. In total, BDAIDs accounted for $3.80 or 8 percent of the PMPM spend but only the RA category was represented in the top 10 at $2.49 PMPM (see figure 6 and appendix A6). More detailed analysis of the oncology, oncology support, and BDAID categories can be found in the category analysis sections.

2015 Commercial PMPM of Top 10 Disease States or Drug Categories by Spend

FIGURE 5 +36+8+8+7+4+4+2+2+2+2Oncology Colony-Stimulating

FactorsImmune Globulin Crohn’s Disease/

Ulcerative ColitisRheumatoid Arthritis Antihemophilic Factor Enzyme

Replacement TherapyMultiple Sclerosis Antiemetics Psoriasis/Psoriatic

Arthritis

$8.45PMPM36%

$1.99PMPM

8%

$1.92PMPM

8%$1.66

PMPM7% $1.06

PMPM4%

$0.90PMPM

4% $0.56PMPM

2%

$0.46PMPM

2%

Allowed Amount PMPM

$17.97

Allowed Amount PMPM

76%

% of medical benefit spend

24.7

Members per 1,000

TOP 10 TOTALS

TOTAL ALLOWED AMOUNT PMPM $23.68

$0.46PMPM

2%

$0.52PMPM

2%


Commercial

Medicare

+41+11+9+6+5+3+2+2+2+2 Allowed Amount PMPM

2015 Medicare PMPM of Top 10 Disease States or Drug Categories by Spend

In looking at categories most utilized by percentage of members, all of the highest utilized categories for commercial were outside of the top 25 spend categories demonstrating high volume but low cost. Corticosteroids accounted for 29 percent of commercial members utilizing a medical pharmacy agent, yet ranked 31 among medical benefit categories. Pain management composed 12 percent of members who utilized a medical pharmacy agent, but ranked 22 of 49 categories by spend (see figure 7).

Similarly, in Medicare, corticosteroids represented 38 percent of members utilizing a medical pharmacy agent but ranks 27 out of 42 categories. Pain management was also a highly utilized category in Medicare representing 6 percent of Medicare members who utilized a medical pharmacy agent, but ranked 29 of 42 categories. Other high-volume categories were on par with their ranking by spend.

2015 PMPM of Most Utilized Disease States or Drug Categories by Percentage of Members

RANK THERAPY % OF MEMBERS MEMBERS PER 1,000*

CATEGORY RANK BY SPEND

PMPM

1 Corticosteroids 29% 58.6 31 $0.11

2 Pain Management 12% 29.5 22 $0.19

3 Infectious Disease 7% 16.3 12 $0.42

4 Sedatives/Anesthesia 7% 18.6 32 $0.10

RANK THERAPY % OF MEMBERS MEMBERS PER 1,000*

CATEGORY RANK BY SPEND

PMPM

1 Corticosteroids 38% 126.9 27 $0.18

2 Oncology 6% 22.1 1 $19.07

3 Pain Management 6% 20.7 29 $0.09

4 Ophthalmic Injections 4% 14.6 2 $5.25

FIGURE 7

FIGURE 6

$38.38

Allowed Amount PMPM

83%

% of medical benefit spend

74.9

Members per 1,000

TOP 10 TOTALS

TOTAL ALLOWED AMOUNT PMPM $46.01

$19.07PMPM41%

$2.49PMPM

5% $0.70PMPM

2%

$4.32PMPM

9%

$0.88PMPM

2%

$5.25PMPM11%

$1.22PMPM

3%$0.70

PMPM2%

$2.98PMPM

6%

$0.78PMPM

2%

Oncology Ophthalmic Injections Colony-Stimulating Factors

Immune Globulin Rheumatoid Arthritis Erythropoiesis-Stimulating Agents

Viscosupplementation Oncology Support: Gastrointestinal

Multiple Sclerosis Infectious Disease


*Members per thousand includes overlap with other therapies and not unique members.


FIGURE 8

Medical Pharmacy Percentage Spend by LOB 2014-2015

Drug LandscapeJust as only a few medical benefit

therapeutic categories drove spend in 2015, a limited number of medical benefit drugs represented the majority of payer costs. For both the commercial and Medicare medical pharmacy benefits, the top 50 drugs made up close to 80 percent of spend. Of the 925 Healthcare Common Procedure Coding System (HCPCS) codes examined for the medical benefit analyses, the top 100 represent 90 percent of the total PMPM costs for commercial and 96 percent for Medicare (see figures 8 and 9).

From 2014 to 2015, in commercial, the impact of the top 100 drugs increased in all segments with the PMPM of the top 10 drugs and the top 100 drugs increasing by 9 percent and 11 percent, respectively. The top 25 drugs in the commercial population make up 61 percent of spend. In Medicare, the trend from 2014 to 2015 increased across all segments, but at a lower rate. The top 10 drugs saw a 7 percent increase in impact and accounted for half (50 percent) of total Medicare spend. The top 25 drugs accounted for almost three-quarters of spend (71 percent).

The top 25 commercial drugs that made up 61 percent of spend were in line with top therapeutic classes. Of the top categories, twelve oncology, two immune globulin, and four autoimmune drugs were included in the top 25. In addition, colony-stimulating factors (CSFs), multiple sclerosis immunomodulating agents, antihemophilic factor agents and antiemetics had drugs in the top 25. Overall, the top 25 drugs were similar year over year. New to the list in 2015 was Cinryze with a 4 percent increase in PMPM, swapping out one of the highest cost medical pharmacy agents, Cerezyme, from the previous year (see figure 9).

Specifically in commercial, Remicade continued to be the highest spend agent. Remicade saw an 11 percent change in PMPM from $2.31 in 2014 to $2.56 in 2015. Remicade, Neulasta (7 percent increase in PMPM), Avastin (1 percent increase in PMPM), Herceptin (15 percent increase in PMPM), and Rituxan (7 percent increase in PMPM), remained the top five drugs by spend and have

2014 PMPM 2015 PMPM 2014-2015% PMPM change

Top 10 $9.74 $10.65 9%

Top 25 $13.51 $14.54 8%

Top 50 $16.71 $18.19 9%

Top 100 $19.27 $21.31 11%

All Medical Benefit Drugs $20.95 $23.68 13%

TOP 10

TOP 25

TOP 50

TOP 100

45%

61%

77%

90%

2014 PMPM 2015 PMPM 2014-2015% PMPM change

Top 10 $21.68 $23.11 7%

Top 25 $31.53 $32.79 4%

Top 50 $39.19 $39.83 2%

Top 100 $43.40 $44.21 2%

All Medical Benefit Drugs $45.23 $46.01 2%

TOP 10

TOP 25

TOP 50

TOP 100

50%

71%

87%

96%

2015 % of total PMPM

2015 % of total PMPM

Commercial

Medicare

Commercial top 25 medical benefit drugs equaled 61 percent of total PMPM

Medicare top 25 medical benefit drugs equaled 71 percent of total PMPM


Commercial Top 25 Drugs by Spend 2014-2015Allowed Amount PMPM Annual Cost per Patient Reimbursement Trend

RANK HCPCS BRAND CATEGORY 2014 2015 % CHANGE 2014 2015 % CHANGE ASP AWP

1 J1745 Remicade BDAID $2.31 $2.56 11% $27,529 $32,335 17% 8% 10%

2 J2505 Neulasta Oncology Support: Colony-Stimulating Factors

$1.73 $1.84 7% $19,231 $22,184 15% 10% 10%

3 J9035 Avastin Oncology, Ophthalmic Injections $1.27 $1.28 1% $19,014 $21,121 11% 4% 5%

4 J9355 Herceptin Oncology $1.04 $1.20 15% $41,771 $48,085 15% 6% 6%

5 J9310 Rituxan Oncology, BDAID: Rheumatoid Arthritis $1.09 $1.17 7% $29,641 $33,186 12% 6% 6%

6 J1561 Gamunex-C/Gammaked Immune Globulin $0.47 $0.66 40% $54,734 $58,493 7% 4% 1%

7 J1569 Gammagard Liquid Immune Globulin $0.50 $0.58 15% $44,746 $49,936 12% -3% 5%

8 J2323 Tysabri Multiple Sclerosis, BDAID: Crohn’s Disease/Ulcerative Colitis

$0.45 $0.51 15% $41,714 $51,817 24% 10% 12%

9 J7192 Advate/Helixate FS/Kogenate FS/Kovaltry/Recombinate

Antihemophilic Factor$0.51 $0.42 -17% $167,206 $161,923 -3% 3% 12%

10 J9306 Perjeta Oncology $0.28 $0.42 47% $37,291 $42,349 14% 2% 3%

11 J0897 Xgeva/Prolia Oncology, Bone Resorption Inhibitors (Osteoporosis)

$0.34 $0.39 15% $4,682 $4,861 4% 6% 8%

12 J9305 Alimta Oncology $0.37 $0.35 -5% $32,922 $37,756 15% 2% 1%

13 J1300 Soliris Rare Diseases $0.25 $0.32 25% $326,165 $449,911 38% 3% 2%

14 J0585 Botox Botulinum Toxins $0.23 $0.29 26% $2,124 $2,580 21% 3% 3%

15 J2357 Xolair Asthma/COPD $0.21 $0.26 25% $15,546 $15,931 2% 8% 8%

16 J9264 Abraxane Oncology $0.25 $0.24 -3% $24,921 $26,738 7% 4% 8%

17 J9228 Yervoy Oncology $0.26 $0.25 -7% $143,088 $157,531 10% 4% 3%

18 J9263 Eloxatin Oncology $0.29 $0.24 -18% $9,352 $8,646 -8% -35% -5%

19 J2469 Aloxi Oncology Support: Antiemetics $0.24 $0.23 -2% $2,173 $2,344 8% 7% 8%

20 J2353 Sandostatin LAR Oncology Support: Gastrointestinal $0.22 $0.23 7% $41,848 $46,094 10% 11% 13%

21 J9041 Velcade Oncology $0.24 $0.23 -3% $30,032 $30,993 3% 0% 2%

22 J0129 Orencia BDAID $0.19 $0.23 19% $18,957 $25,413 34% 19% 17%

23 J9171 Taxotere Oncology $0.26 $0.22 -13% $7,616 $7,669 1% -35% -15%

24 J9055 Erbitux Oncology $0.25 $0.21 -17% $43,440 $44,844 3% 0% 2%

25 J0598 Cinryze Hereditary Angioedema $0.18 $0.19 4% $391,907 $342,332 -13% 5% 5%

Top 25 Totals $13.45 $14.54 8% $22,529 $24,751 10%

Total Medical Pharmacy $20.95 $23.68 13% $1,766 $1,988 13% 10% 14%

Please note that due to rounding, some column totals do not add up accurately.

FIGURE 9

been since the first edition of this report. Also in commercial, oncology drug Perjeta saw the largest

increase in PMPM with a 47 percent jump from $0.28 in 2014 to $0.42 in 2015. Another oncology agent, Eloxatin, saw the largest decrease in PMPM of 18 percent, primarily due to generic availability of oxaliplatin, decreasing from $0.29 to $0.24. Soliris, used in the treatment of paroxysmal nocturnal hemoglobinuria and

atypical hemolytic uremic syndrome, saw the largest increase in annual cost per patient of 38 percent, up to $449,911. Orencia and Sandostatin LAR saw the largest increases in ASP of 19 percent and 11 percent respectively. Orencia also saw the largest increase in AWP of 17 percent.



Medicare Top 25 Drugs by Spend 2014-2015

In Medicare, 71 percent of medical benefit spend was spread across the top 25 drugs and among the top 10 categories. Of the top categories, 11 oncology drugs, three autoimmune agents, two ophthalmic injections, and two ESAs were included in the top 25. In addition, intravenous immune globulin, CSFs, rare diseases and multiple sclerosis had drugs in the top 25. One immune globulin agent, Gamunex-C/Gammaked, fell from the top 25 in 2015, replaced by unclassified spend for J9999 (see figure 10).

In 2015, Neulasta, at $4.02 PMPM, was the top spend drug for Medicare and Rituxan, at $3.69, was the second highest spend. Eylea quadrupled its PMPM and leaped from ranking

Allowed Amount PMPM Annual Cost per Patient Reimbursement Trend

RANK HCPCS BRAND CATEGORY 2014 2015 % Change 2014 2015 % Change ASP AWP

1 J2505 Neulasta Oncology Support: Colony-Stimulating Factors

$3.70 $4.02 9% $12,989 $13,408 3% 10% 10%

2 J9310 Rituxan Oncology, BDAID: Rheumatoid Arthritis

$3.65 $3.69 1% $23,448 $23,096 -2% 6% 6%

3 J2778 Lucentis Ophthalmic Injections $2.99 $2.71 -9% $9,374 $9,938 6% -2% 0%

4 J9035 Avastin Oncology, Ophthalmic Injections $2.41 $2.67 10% $3,252 $3,942 21% 4% 5%

5 J0178 Eylea Ophthalmic Injections $0.52 $2.25 331% $8,659 $8,690 0% 0% 0%

6 J1745 Remicade BDAID $2.03 $2.22 9% $18,443 $22,218 20% 8% 10%

7 J0897 Xgeva/Prolia Oncology, Bone Resorption Inhibitors (Osteoporosis)

$1.38 $1.46 6% $2,811 $2,940 5% 6% 8%

8 J1569 Gammagard Liquid

Immune Globulin $1.27 $1.42 11% $39,406 $35,719 -9% -3% 5%

9 J9305 Alimta Oncology $1.48 $1.37 -7% $25,333 $26,437 4% 2% 1%

10 J9355 Herceptin Oncology $1.57 $1.29 -18% $30,668 $31,666 3% 6% 6%

11 J9041 Velcade Oncology $1.18 $1.05 -11% $23,979 $23,180 -3% 0% 2%

12 J9033 Treanda Oncology $1.03 $0.97 -6% $24,921 $27,305 10% 8% 14%

13 J0881 Aranesp Oncology Support: Erythropoiesis-Stimulating Agents

$0.67 $0.79 18% $5,145 $5,665 10% 6% 5%

14 J2353 Sandostatin LAR Oncology Support: Gastrointestinal

$0.63 $0.78 24% $31,300 $33,613 7% 11% 13%

15 J9264 Abraxane Oncology $0.89 $0.71 -20% $17,966 $15,655 -13% 4% 8%

16 J2323 Tysabri Multiple Sclerosis, BDAID: Crohn’s Disease/Ulcerative Colitis

$0.61 $0.69 15% $36,555 $43,901 20% 10% 12%

17 J0129 Orencia BDAID $0.55 $0.67 22% $16,170 $22,601 40% 19% 17%

18 J9217 Eligard/Lupron Depot

Oncology $0.68 $0.67 -1% $1,958 $1,974 1% 7% 10%

19 J1300 Soliris Rare Diseases $0.71 $0.62 -14% $280,069 $494,873 77% 3% 2%

20 J9228 Yervoy Oncology $0.60 $0.52 -13% $108,391 $101,694 -6% 4% 3%

21 J9025 Vidaza Oncology $0.57 $0.49 -14% $25,802 $19,015 -26% -18% -2%

22 J9055 Erbitux Oncology $0.78 $0.47 -40% $28,708 $28,016 -2% 0% 2%

23 J0885 Procrit Oncology Support: Erythropoiesis-Stimulating Agents

$0.60 $0.43 -29% $3,513 $3,781 8% 4% 5%

24 J9999 Unclassified Unclassified $0.07 $0.42 542% $21,781 $28,801 32% - -

25 J2469 Aloxi Oncology Support: Antiemetics $0.47 $0.40 -15% $1,186 $1,089 -8% 7% 8%

Top 25 Totals $31.04 $32.79 6% $10,411 $11,063 6%

Total Medical Pharmacy $45.23 $46.01 2% $2,041 $2,285 12% 10% 14%

23rd in 2014, to fifth in 2015, with a 331 percent increase in PMPM from $0.52 in 2014 to $2.25 in 2015. This increase was primarily due to the first-year results of the Protocol T study in diabetic macular edema. Unclassified agents will be discussed in the next section, but the introduction of PD1 inhibitors Opdivo and Keytruda largely contributed to a more than 500 percent increase in the category. Erbitux saw a 40 percent decrease in PMPM from $0.78 in 2014 to $0.47 in 2015. Again, Soliris saw the largest change in annual cost per patient with a 77 percent increase to over $490,000.

FIGURE 10



FIGURE 11Other Cost DriversAs evidenced in the Medicare top 25 agents

by spend, another segment that contributed to the overall medical pharmacy spend was the unclassified HCPCS codes. For commercial, individual unclassified codes did not have an impact on the top 25 drugs, but in total, as its own disease state or drug category, unclassified drugs accounted for $0.45 of total PMPM and would rank 11th as its own drug class. Unclassified code J3490 had the largest impact of $0.16 PMPM, and typically includes traditional injectable drugs, such as powders, solutions, anesthesia, antihistamines, cardiovascular agents, and antibiotics (see figure 11).

For Medicare, unclassified code J9999 contributed to the top 25 drugs, due to the introduction of PD1 inhibitors Opdivo and Keytruda, ranked 24th, and contributed $0.43 of PMPM spend. In total, 2015 unclassified Medicare codes accounted for $0.70 of spend.

Cinryze, found in the top 25 commercial drugs, and Soliris, found in the top 25 commercial and Medicare drug listings, represented another expensive drug segment: highest cost medical benefit drugs by annual cost per patient. There are numerous other drugs that represent the highest annual cost per patient on the medical benefit; however, due to the limited population they impacted, many fell outside of the top 25 drugs by payer PMPM spend. The most expensive drug, Lumizyme, cost more than $600,000 per patient annually among commercial members and $896,000 per patient annually in Medicare members but only affected one in every 100,000 members (see figures 12 and 13).

Many of these disease states are genetic disorders and last over a patient’s lifetime. With that in mind and not controlling for increases in cost of living, over a 10-year period, some of these medications may cost between $2.5 million and $6 million. For a drug such as Soliris, with disease onset at the age of 35 and overall survival the same as the normal population, payers can expect to incur more than $18 million in costs.3

On average, the 10 most expensive commercial medical benefit drugs averaged $421,220 annually per patient and affected 2 per 100,000 members. The 10 costliest Medicare medical benefit drugs averaged $268,780 and affected 8 per 100,000 members.

Unclassified Code by Allowed Amount PMPM

$421,220 annually $268,780 annually

10 most expensive commercial medical benefit drugs averaged

The 10 costliest Medicare medical benefit drugs averaged

$0.16

$0.12

$0.13

$0.43

$0.02

$0.14

$0.12

$0.03

J3490

J3590

J9999

C9399

J9999

J3590

J3490

C9399

Commercial

Medicare

3. Johns Hopkins The Sidney Kimmel Comprehensive Cancer Center. Cancer Types: Paroxysmal Nocturnal Hemoglobinuria (PNH). http://www.hopkinsmedicine.org/kimmel_cancer_center/types_cancer/paroxysmal_nocturnal_hemoglobinuria_pnh.html. Accessed March 2017.



99+59+45+35+24+23+22+21+20+18 $129,938

+28+62+20+7+5+12+3+26+52+15Lumizyme

Soliris

Xyntha

Cerezyme

Fabrazyme

Istodax

Hemofil M/Koate DVI/Monoclate-P

Remodulin

Yervoy

Provenge

$895,706

$84,529

$101,694

$107,996

$144,800

$249,480

$353,270

$494,873

Lumizyme

Novoseven

Elelyso

Soliris

Mononine

Aldurazyme

Cinryze

Feiba

Alprolix

Eloctate

+18+30+4+64+6+4+38+4+4+4

93+92+78+75+73+65+64+62+59+57FIGURE 12

FIGURE 13

2015 Top 10 Highest Cost Commercial Medical Benefit Drugs by Cost per Patient and Allowed Amount PMPM

2015 Top 10 Highest Cost Medicare Medical Benefit Drugs by Cost per Patient and Allowed Amount PMPM

$0.09

$0.28

$0.15

$0.02

$0.20

$0.07

$0.03

$0.05

$0.02

$0.12

$0.19

$0.02

$0.26

$0.02

$0.03

$0.15

$0.03

$0.32

$0.52

$0.62

$630,159

$275,079

$288,520

$324,964

$342,332

$355,816

$435,020

$449,911

$483,242

$627,161

Lumizyme

Novoseven

Elelyso

Soliris

Mononine

Aldurazyme

Cinryze

Feiba

Alprolix

Eloctate

COST PER DECADE: $6,301,587

















Annual Cost per Patient

Cost per Patient

PMPM

PMPM

$125,518

Lumizyme

Soliris

Xyntha

Cerezyme

Fabrazyme

Istodax

Hemofil M/Koate DVI/Monoclate-P

Remodulin

Yervoy

Provenge


+28+62+20+7+5+12+3+26+52+15+18+30+4+64+6+4+38+4+4+4

Medical Benefit Utilization

Earlier we noted the most utilized categories on the medical benefit were corticosteroids and pain management. With that in mind, when evaluating all medical benefit utilization in 2015 by HCPCS representing single source/branded drugs versus multiple source/generic agents, 74 percent of commercial and 70 percent of Medicare claims were billed with HCPCS representing generic NDC’s (see figure 14).

FIGURE 14

Medical Benefit Use of Brand vs. Generic for Commercial and Medicare

25+75+u2014

25%

75% 26+74+u2015

26%

74%

Brand Generic

Commercial

33+67+u201433%

67% 30+70+u201530%

70%

Medicare


Medica l Benef i t Ca tegory Ana lys i s

Oncology continues to be the leading payer expense on the medical benefit, with commercial utilization continuing to shift to hospital outpatient facilities for the costliest agents.

Oncology had a significant year in approvals of new drugs to the category with novel mechanisms of action (MOAs), as well as new indications for existing agents. Oncology immunotherapies saw the approval of atezolizumab (Tecentriq) in 2016 and received six additional FDA-approved indications for existing agents, including a non-small cell lung cancer (NSCLC) indication for PD-1 treatment nivolumab (Opdivo).

Most medical benefit oncology drugs are administered in the physician office with 57 percent of commercial members and 68 percent of Medicare members opting to receive chemotherapy in this setting vs. 39 percent and 28 percent in the hospital outpatient setting, respectively (see figure 17). As expected, the oncology category is the top medical benefit category in both commercial and Medicare. The PMPM cost in Medicare is more than double the cost in commercial lines of business at $19.07 and $8.45, respectively. The oncology category accounts for more than one-third of the medical benefit spend for both lines of business. The year-over-year trend for this category is 6 percent and 7 percent, respectively, but this is anticipated to increase in 2016 due to the PD1 inhibitors Keytruda and Opdivo receiving classified codes on 1/1/16 (see figure 15).

• Avastin in commercial and Rituxan in Medicare have the top spend in the category of $1.28 and $3.69 PMPM, respectively (see figure 16).

• Of the top 25 drugs by commercial and Medicare payer spend, there are 12 oncology agents. Of those, Yervoy has the highest annual cost per patient of nearly $160,000 and more than $100,000 per year, respectively, which is more than triple the next costliest agent (Herceptin) (see figure 16).

ONCOLOGY

Medical Benefit Category Profiles

New this year, we have included profiles of the seven highest spend categories for the medical benefit: oncology, oncology support, biologic drugs for autoimmune disorders,

immune globulin, ophthalmic injections, rare diseases, and viscosupplementation.

Oncology

FIGURE 15

2015 Commercial and Medicare PMPM of Oncology Agents

$8.45

$19.07

Commercial Medicare

6%2014-2015 PMPM

TREND

36% OF TOTAL COMMERCIAL

PMPM

7%2014-2015 PMPM

TREND

41%OF TOTAL MEDICARE

PMPM

• Perjeta had the largest increase in commercial PMPM spend from 2014 to 2015, showing its continued impact on the breast cancer community first in the metastatic setting and then the later approved neoadjuvant setting (see figure 16).


2015 Oncology Drugs in Top 25 Medical Pharmacy AgentsFIGURE 16

COMMERCIAL

MEDICARE

RANK HCPCS BRAND 2014 2015 % CHANGE 2014 2015 % CHANGE

FIGURE 17

Oncology Member Utilization by Site of Service 2014-2015

Commercial Medicare

HI/SPP

Hospital OP

Physician4+39+574%

39%57% 4+39+574%

39%57% 4+27+694%

28%68%

2014 2015 2014 2015

3+30+674%

30%66%

3 J9035 Avastin $1.27 $1.28 1% $19,014 $21,121 11%

4 J9355 Herceptin $1.04 $1.20 15% $41,771 $48,085 15%

5 J9310 Rituxan $1.09 $1.17 7% $29,641 $33,186 12%

10 J9306 Perjeta $0.28 $0.42 47% $37,291 $42,349 14%

11 J0897 Xgeva/Prolia $0.34 $0.39 15% $4,682 $4,861 4%

12 J9305 Alimta $0.37 $0.35 -5% $32,922 $37,756 15%

16 J9264 Abraxane $0.25 $0.24 -3% $24,921 $26,738 7%

17 J9228 Yervoy $0.26 $0.25 -7% $143,088 $157,531 10%

18 J9263 Eloxatin $0.29 $0.24 -18% $9,352 $8,646 -8%

21 J9041 Velcade $0.24 $0.23 -3% $30,032 $30,993 3%

23 J9171 Taxotere $0.26 $0.22 -13% $7,616 $7,669 1%

24 J9055 Erbitux $0.25 $0.21 -17% $43,440 $44,844 3%

ALLOWED AMOUNT PMPM ANNUAL COST PER PATIENT

2 J9310 Rituxan $3.65 $3.69 1% $23,448 $23,096 -2%

4 J9035 Avastin $2.41 $2.67 10% $3,252 $3,942 21%

7 J0897 Xgeva/Prolia $1.38 $1.46 6% $2,811 $2,940 5%

9 J9305 Alimta $1.48 $1.37 -7% $25,333 $26,437 4%

10 J9355 Herceptin $1.57 $1.29 -18% $30,668 $31,666 3%

11 J9041 Velcade $1.18 $1.05 -11% $23,979 $23,180 -3%

12 J9033 Treanda $1.03 $0.97 -6% $24,921 $27,305 10%

15 J9264 Abraxane $0.89 $0.71 -20% $17,966 $15,655 -13%

18 J9217 Eligard/Lupron Depot $0.68 $0.67 -1% $1,958 $1,974 1%

20 J9228 Yervoy $0.60 $0.52 -13% $108,391 $101,694 -6%

21 J9025 Vidaza $0.57 $0.49 -14% $25,802 $19,015 -26%

22 J9055 Erbitux $0.78 $0.47 -40% $28,708 $28,016 -2%



Oncology Product Preferencing (% of payers)

FIGURE 19

Bone Resorption Inhibitors: Oncology

36+64+R36% 47+53+R47%

Gonadotropin-Releasing Hormone Agents

24+76+R24% 47+53+R47%

Anti-Vascular Endothelial Growth Factors

14+86+R14% 20+80+R20%

Taxanes

5+95+R5% 13+87+R13%

Folinic Acid

12+88+R12% 27+73+R27%

2015 Example Oncology Drugs by Cost per Claim and Unit by Site of Service

FIGURE 18

Alimta $9,607 $10,648 $6,375 $119.61 $125.27 $70.64

Perjeta $9,660 $4,445 $5,630 $21.78 $10.22 $12.10

Erbitux $6,477 $12,835 $3,381 $116.69 $53.48 $60.06

Abraxane $4,414 $9,970 $2,368 $25.07 $13.85 $11.27

Alimta $4,626 — $5,238 $63.64 — $60.80

Perjeta $5,019 — $4,791 $10.42 — $10.13

Erbitux $2,657 — $2,930 $57.03 — $53.65

Abraxane $1,928 — $1,866 $10.44 — $9.63

COMMERCIAL

MEDICARE

HOSPITAL OP HI/SPP PHYSICIAN HOSPITAL OP HI/SPP PHYSICIAN

COST PER CLAIM COST PER UNIT

Commercial (n=42 payers; 101 million lives) Medicare (n=8 payers; 36 million lives)

Oncology agents Erbitux and Abraxane are close to double the cost in the hospital outpatient setting vs. the physician office. Those same drugs had the highest cost per claim in the home infusion/specialty pharmacy setting (see figure 18). Oncology drug categories experienced product preferencing strategies by both commercial and Medicare payers, namely bone

resorption inhibitors used for the prevention of skeletal-related events in patients with bone metastases (36 percent commercial payers, 47 percent Medicare) and gonadotropin-releasing hormones agents (24 percent commercial payers, 47 percent Medicare) prescribed for the treatment of breast and prostate cancer (see figure 19).


42%

58%

36%

64%

Example Oncology Drug Utilization by Site of Service 2014-2015Hospital OP Physician

FIGURE 20

2014Abraxane

2014Erbitux

2014Perjeta

2014Alimta

2015Abraxane

2015Erbitux

2015Perjeta

2015Alimta

43%

57%

45%

55%

46%

54%

45%

55%

41%

59%

43%

57%

8%

24%

60%

2014Abraxane

2014Erbitux

2014Perjeta

2014Alimta

2015Abraxane

2015Erbitux

2015Perjeta

2015Alimta

49%

51%

55%

45%

36%

64%

44%

56%

54%

46%

45%

55%

Commercial

Medicare

50%

50%

46%

54%

Although some medical benefit drug utilization began to shift toward more cost-efficient sites of service in 2015, the same did not occur for certain commercial oncology agents. Perjeta, Abraxane, and Erbitux are examples of agents shifting toward hospital outpatient sites of service from the physician office. For these three drugs, the cost per claim and cost per unit in the hospital outpatient setting were higher compared to the corresponding

costs in the physician’s office, in some cases exceeding two times the cost. For Medicare, with higher cost per unit in the hospital outpatient setting, there was an increase in physician office use for Alimta, Perjeta and Erbitux, but not to the same degree as the commercial benefit. However, for Alimta and Erbitux, the cost per claim is less in the hospital outpatient setting but not for Perjeta, where it is $228 more. (see figures 18 and 20).



Oncology support agents, used in the treatment and prevention of chemotherapy and cancer dis-ease sequelae, represented 12 percent of total med-ical pharmacy costs for commercial and 15 percent for Medicare.

Oncology support drugs are used to treat disorders typically resulting from chemotherapy regimens including antiemetics to reduce chemotherapy-induced nausea and vomiting, colony- stimulating factors to prevent febrile neutropenia, erythropoiesis- stimulating agents to prevent anemia, and gastrointestinal agents to treat tumor-driven diarrhea.

The entry of the first biosimilar agent, Zarxio (filgrastim-sndz), in the CSF category represented a landmark event in the space. With additional biosimilars expected to be released for Neulasta, payers are now presented with more flexibility in terms of product preferencing and management opportunities.

Oncology support drugs accounted for 12 percent of commer-cial and 15 percent of Medicare spend. Overall, the catego-

ry accounted for $2.78 of total commercial PMPM and $6.97 of Medicare PMPM. The annual trend for the oncology support agents was 1% in commercial and 4% in Medicare (see figure 21).• In commercial and Medicare, CSF agents had the highest

spend at $1.99 and $4.32 PMPM, respectively (see figure 21).• Aloxi, Neulasta, and Sandostatin LAR ranked in the top

25 drugs for both commercial and Medicare. Additionally, Aranesp and Procrit made the top 25 drugs in Medicare (see figure 22).

ONCOLOGY SUPPORT

2015 Commercial and Medicare PMPM of Oncology Support Agents

FIGURE 21

Commercial Medicare

Antiemetics Colony- Stimulating Factors

Eythropoiesis- Stimulating Agents

Gastrointestinal Total

$0.46 $0.66

$1.99

$4.32

$0.10 $0.24

$6.97

4%2014-2015 PMPM TREND

1%2014-2015 PMPM TREND

$2.78

$0.78$1.22

15% OF TOTAL MEDICARE

PMPM


PMPM



2015 Oncology Support Drugs in Top 25 Medical Pharmacy Agents

FIGURE 22

MEDICARE

FIGURE 23

Example Oncology Support Drug Utilization by Site of Service 2014-2015

HI/SPP Hospital OP Physician

Commercial Medicare

COMMERCIAL

2014 2014 20142015 2015 20152014 2014 20142015 2015 2015

Neulasta Aloxi Sandostatin LAR Neulasta Aloxi Sandostatin LAR

47%43%

53%57%

45% 50%45%

52%51% 51%48% 48%48% 58%

49% 49%55% 50%52% 52%46% 48%45% 42%

2 J2505 Neulasta $1.73 $1.84 7% $19,231 $22,184 15%

19 J2469 Aloxi $0.24 $0.23 -2% $2,173 $2,344 8%

20 J2353 Sandostatin LAR $0.22 $0.23 7% $41,848 $46,094 10%

1 J2505 Neulasta $3.70 $4.02 9% $12,989 $13,408 3%

13 J0881 Aranesp $0.67 $0.79 18% $5,145 $5,665 10%

14 J2353 Sandostatin LAR $0.63 $0.78 24% $31,300 $33,613 7%

23 J0885 Procrit $0.60 $0.43 -29% $3,513 $3,781 8%

25 J2469 Aloxi $0.47 $0.40 -15% $1,186 $1,089 -8%

RANK HCPCS BRAND 2014 2015 % CHANGE 2014 2015 % CHANGE

ALLOWED AMOUNT PMPM ANNUAL COST PER PATIENT

9% 7%



Oncology Support Product Preferencing (% of payers)

Antiemetics

Erythropoiesis-Stimulating Agents

Colony-Stimulating Factors

FIGURE 25


40+60+R40% 52+48+R52%

43+57+R43%

47+53+R47% 73+27+R73%

60+40+R60%

Oncology Support Member Utilization by Site of Service 2014-2015

FIGURE 24

Commercial Medicare

HI/SPP

Hospital OP

Physician0+83+1783%

17% 0+85+1585%

15% 2+58+402%

58%40%

2014 2015 2014 2015

0+52+4852%48%

Commercial member utilization of oncology support agents shifted slightly higher in the hospital outpatient setting. Medicare member uti-lization was more balanced, with 58 percent of members utilizing the hospital outpatient setting, up from 52 percent in 2014 (see figure 24).

Less than half of payers had some preferencing for antiemet-ics, while more than half and almost three-quarters (73 percent)

of Medicare payers had preferencing for CSF use (see figure 25).The costs per unit and per claim for Medicare are almost the

same for hospital outpatient facilities versus physician office, while for commercial the costs are two to three times more expensive in the hospital outpatient setting (see figure 26).


10%

24%

50%

16%

10%

25%

36%

29%

30%

45%

21%

4%

2015 Percentage of Allowed Amount PMPM by Emetogenic Potential of Chemotherapy Regimen

HEC MEC LEC MinEC

FIGURE 27

Commercial Medicare

2015 Example Oncology Support Drugs by Cost per Claim and Unit by Site of Service

FIGURE 26

6%

35%

40%

19%

2%

28%

59%

11%

18%

52%

26%

4%

Neulasta $3,792 — $3,672 $3,787.21 — $3,671.96

Aloxi $220 — $210 $22.62 — $21.06

Sandostatin LAR $4,745 — $4,026 $155.52 — $149.91

MEDICARE

Neulasta $8,433 $5,954 $4,134 $8,404.88 $4,871.77 $4,127.65

Aloxi $693 $398 $252 $71.82 $27.83 $25.14

Sandostatin LAR $8,676 $3,984 $5,169 $313.15 $151.61 $168.19

COMMERCIAL

HOSPITAL OP HI/SPP PHYSICIAN HOSPITAL HI/SPP PHYSICIAN


Aloxi is indicated for the prevention of acute nausea and vomiting asso-ciated with initial or repeat courses of highly emetogenic chemotherapy (HEC) and prevention of acute and delayed nausea and vomiting with initial and repeat courses of moderately emetogenic chemotherapy (MEC). Interestingly, 25 and 30 percent of Aloxi’s spend was billed with low emetogenic chemotherapy (LEC) and minimally emetogenic

chemotherapy (MinEC) regimens under the commercial and Medicare medical benefits, respectively. Zofran saw 29 percent of its spend billed with MinEC regimens in commercial and 19 percent in Medi-care, although no routine prophylaxis is recommended for patients re-ceiving regimens associated with less than 10 percent frequency of emesis (see figure 27).

Aloxi Ondansetron (Zofran)

Granisetron (Kytril)

Aloxi Ondansetron (Zofran)

Granisetron (Kytril)


M ed i ca l Bene f i t Ca t ego r y Ana lys i s

BDAIDs remained a significant spend driver for payers, but utilization by site of service experienced first time trend toward the most cost efficient pro-vider, the physician office.

Biologic drugs for autoimmune disorders are used to treat a variety of disorders including therapies for ankylosing spondy-litis, Crohn’s disease/ulcerative colitis, psoriasis/psoriatic arthri-tis, rheumatoid arthritis, systemic lupus erythematosus, and sev-eral others. Over the last five years, the majority of members received their biologics for autoimmune diseases in the physi-cian office setting. In 2015, 60 percent of commercial and 63 percent of Medicare members opted for this site of service, a 3 percentage point increase over the previous year in both lines of business (see figure 30). Overall, the category accounted for $3.55 of total commercial PMPM and $3.80 of Medicare PMPM spend, ranking 2nd after oncology for commercial and fourth in Medicare (see figure 28).

• In commercial, Crohn’s disease/ulcerative colitis had had the highest spend at $1.66 PMPM. In Medicare, rheumatoid arthritis accounted for the largest spend at $2.49 PMPM (see figure 28).

• As expected, commercial claim and unit costs in the hospital outpatient setting were more than double the

physician office for two frequently used BDAID agents, Remicade and Orencia. For Medicare, claim and unit costs were relatively similar across these three outpatient sites of service (see figure 29).

• For the first time ever captured in our Trend Report, Remicade saw increased use in the physician of-fice, which shifted from the hospital outpatient setting. Orencia utilization is fairly consistent year-over-year with a small shift in trends among the three sites based on line of business (see figure 31).

• Of those payers who implemented product preferenc-ing, 88 percent of commercial payers and 80 percent of Medicare payers had some form of preferencing for the BDAID category (see figure 32).

• For commercial, 92 percent of payers implemented a prior authorization for the use of BDAID treatments. When payers had a separate strategy for Medicare (n=8), 75 percent of them implemented a prior authori-zation and 25 percent offered care/case management programs (see figures A30 and A31 in appendix).

• When analyzing just rheumatoid arthritis utilization, Remicade consistently had the most utilization and Orencia had the second highest utilization (see figures 33 and 35).

BIOLOGIC DRUGS FOR AUTOIMMUNE DISORDERS

FIGURE 28

2015 Commercial and Medicare PMPM of Biologics for Autoimmune DiseasesCommercial Medicare

Crohn’s Disease/Ulcerative Colitis

Rheumatoid Arthritis Psoriasis/Psoriatic Arthritis

Systemic Lupus Erythematosus

Other Ankylosing Spondylitis Total

$1.66

$0.67

$1.06

$2.49

$3.55

$3.80

$0.46

$0.40$0.14 $0.11 $0.08 $0.07

15%OF TOTAL COMMERCIAL

PMPM

23%2014-2015 PMPM

TREND

35%2014-2015 PMPM

TREND

8%OF TOTAL MEDICARE

PMPM

$0.05$0.16



9+34+579%

34%57%

2014

FIGURE 29

2015 Example BDAID by Cost per Claim and Unit by Site of Service

FIGURE 30

88+12+A88%

80+20+A80%

BDAID Product Preferencing (% of payers)


2015 Example BDAID Drug Utilization by Site of Service 2014-2015


2014Remicade

2015Remicade

2014Remicade

2015Remicade

2014Orencia

2015Orencia

2014Orencia

2015Orencia

Commercial Medicare

53%

40%

7%

57%

36%

7%

68%

23%

9%

68%

24%

8%

52%

44%

4%

47%

49%

4%

48%

51%

1%

45%

52%

3%

FIGURE 32FIGURE 31

BDAID Member Utilization by Site of Service2014-2015


Commercial

9+31+609%

31%60%

2015

2+35+632%

35%63%

20152014

2+38+602%

38%60%



Remicade $10,159 $5,523 $4,560 $233.23 $105.60 $88.88

Orencia $6,388 $2,651 $2,838 $92.29 $34.26 $35.97

MEDICARE

Remicade $4,203 $4,266 $3,397 $80.85 $94.99 $75.60

Orencia $2,569 $2,446 $2,671 $35.43 $31.66 $34.61

COMMERCIAL

Medicare


Medica l Benef i t Ca tegory Ana lys i s 16+27+25+17+25+19 12 + 22 + 23 + 15 + 19 + 182015 Commercial BDAID: Rheumatoid Arthritis Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 33

2015 Commercial BDAID: Rheumatoid Arthritis Utilization by Site of Service

FIGURE 34


$12,859

$16,058

$22,477

$27,384

$23,189

$25,509

$15,867

$17,407

$18,957

$25,413

$18,348

$19,9762014 20142015 2015

2015

2014

Cimzia Remicade Rituxan Simponi Aria Orencia Actemra

3%

42%

14%

14%

4%

22%

$0.12

$0.02

$0.19

$0.42

3%

39%

15%

15%

8%

20%

Utilization by Members Allowed Amount PMPM

TOTAL: $0.93TOTAL: $1.06

Cimzia

Remicade

Rituxan

Simponi Aria

Orencia

Cimzia

Remicade

Rituxan

Simponi Aria

Orencia

Actemra

Actemra


1%

31%

9%

20%

9%

29%

38%

21%

15%

3%

22%

4%

39%

14%

14%

8%

20%

HI/SPP Hospital Physician

Utilization by Members

$0.15

$0.03

$0.13

$0.17

$0.05

$0.02

$0.23

$0.46



16+27+25+17+25+19 19 + 20 + 17 + 18 + 22 + 1612 + 22 + 23 + 15 + 19 + 18 15 + 16 + 21 + 17 + 17 + 142015 Medicare BDAID: Rheumatoid Arthritis Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 35

2015 Medicare BDAID: Rheumatoid Arthritis Utilization by Site of Service

FIGURE 36


$15,650

$19,609

$15,967

$19,826

$21,233

$17,898

$16,241

$18,871

$16,170

$22,601

$14,201

$15,9002014 20142015 2015

2015

2014


4%

49%

12%

9%

2%

24%

9%

43%

11%

8%

5%

24%


TOTAL: $2.34TOTAL: $2.49

Cimzia

Remicade

Rituxan

Simponi Aria

Orencia

Cimzia

Remicade

Rituxan

Simponi Aria

Orencia

Actemra

Actemra



70%

10%

20%

2%

46%

11%

9%

4%

29%

12%

41%

12%

8%

5%

21%


$0.09$0.21

$1.10$1.08

$0.25$0.11

$0.67

$0.17

$0.37

$0.04

$0.55

$0.19




Immune Globulin product preferencing is visible by provider type/distribution channel, but it is a tactic only employed by a small percentage of com-mercial payers.

The top drugs utilized in the Immune Globulin (IG) category were Gamunex-C/Gammaked and Gammagard liquid. They were also the top immune globulin trend drivers for commercial, with their PMPM increasing 40 percent and 15 percent, respectively from 2014 to 2015 (see figure 9). Over the last five years, commercial administration of these drugs has been mainly in the home infusion/specialty pharmacy setting, although many members were treated in the hospital outpatient setting. Medicare administration has been more fluid and in 2015 was closely split between the home infusion/specialty pharmacy and physician office (see figure 40). Overall, the category (including both intravenous and subcutaneous products) accounted for $1.92 of total commercial PMPM and $2.98 of Medicare PMPM ranking as the fourth-highest spend category for commercial and the fifth-highest category in Medicare (see figure 37).

• Product preferencing tactics are typically not employed by commercial payers for immune globulin categories (31 percent for IVIG and 17 percent for SCIG); however, more than half (53 percent) of payers with Medicare Advantage lives took advantage of this management strategy for IVIG specifically (see figure 38).

• The disparity by place of service in commercial claim and

unit costs was not as great as the BDAID category. In most cases, however, hospital outpatient facilities carried the highest claim and unit costs relative to other sites of care. Conversely, with Medicare, home infusion carries the greatest cost on a per claim basis. In most cases, cost per claim is actually lower in the hospital outpatient setting rel-ative to home infusion and physician office (see figure 39).

• Just like BDAIDs, IG drugs for commercial showed an in-creased trend toward the physician office setting in 2015 with utilization shifting from both the hospital outpatient fa-cility and home infusion/specialty pharmacy settings (see figure 40).

• For commercial and Medicare, Gammagard Liquid and Gamunex-C/Gammaked were utilized mostly in the home infusion/specialty pharmacy setting, while Gammagard and Privigen were utilized in the hospital outpatient setting (see figure 41).

• Both commercial and Medicare payers are most likely to use prior authorization as a management strategy in this category with disease or care management program as the second most common strategy (see figures A30 and A31 in appendix).

IMMUNE GLOBULIN (IG)

FIGURE 38

Immune Globulin Product Preferencing (% of payers) Commercial (n=42 payers; 101 million lives) Medicare (n=8 payers; 36 million lives)

Intravenous Immune Globulin

Subcutaneous Immune Globulin

31+69+A31%

17+83+A17%

53+47+A53%

20+80+A20%Immune Globulin

FIGURE 37

2015 PMPM of Immune Globulin Agents

$1.92

$2.98

Commercial Medicare

25%2014-2015 PMPM

TREND


PMPM

-2%2014-2015 PMPM

TREND


PMPM


FIGURE 39

2015 Example IG Drugs by Cost per Claim and Unit by Site of Service

FIGURE 40

Immune Globulin Member Utilization by Site of Service 2014-2015



2014 2015

46+33+2146%33%

21% 46+30+2446%30%

24%

2014 2015

36+26+3836%

26%

38%41+35+2441%

35%

24%

COST PER UNITCOST PER CLAIM


Gammagard Liquid $6,718 $4,571 $4,202 $91.18 $61.51 $59.08

Gamunex-C/Gammaked $7,759 $4,194 $5,600 $116.10 $60.06 $60.78

Gammagard $4,833 $4,443 $5,777 $69.86 $63.68 $59.14

Privigen $5,394 $3,909 $2,391 $95.24 $52.05 $49.84

COMMERCIAL

MEDICARE

Gammagard Liquid $3,164 $5,014 $3,326 $42.47 $57.13 $47.95

Gamunex-C/Gammaked $2,633 $3,918 $3,275 $48.63 $42.91 $41.21

Gammagard $1,388 $2,871 $1,723 $35.59 $100.15 $43.07

Privigen $3,118 $2,118 — $49.11 $47.39 —

FIGURE 41

Example IG Drug Utilization by Site of Service 2014-2015

Gammagard Liquid

Gamunex-C/Gammaked

Gammagard Privigen Gammagard Liquid

Gamunex-C/Gammaked

Gammagard Privigen2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

15%

24%

61%

14%

31%

55%

22%

40%

38%

22%

30%

48%

26%

61%

13%

10%

70%

20%

69%

31%

56%

44%

25%

30%

45%

22%

21%

57%

14%

40%

46%

21%

38%

41%

34%

41%

25%

37%

35%

28%

12%

60%

28%

15%

58%

27%

MedicareCommercial

Commercial Medicare



2015 Commercial IG Utilization by Site of Service

FIGURE 43

Commercial IG Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 42

Privigen Gamunex-C/Gammaked Gammagard Octagam Gammagard Liquid Flebogamma Gammaplex Bivigam


23+27+24+13+22+19+24+2021+29+23+16+25+19+22+42 Annual Cost per Patient

$45,143

$41,537

$54,734

$58,493

$47,060

$45,297

$23,686

$32,048

$44,746

$49,936

$38,364

$38,905

$47,303

$43,955

$40,686

$84,773

2015

2014Privigen

Privigen

Gamunex-C/Gammaked

Gamunex-C/Gammaked

Gammagard

Gammagard

Octagam

Octagam

Gammagard Liquid

Gammagard Liquid

Flebogamma

Flebogamma

Gammaplex

Gammaplex

Bivigam

Bivigam2014 20142015 2015

11%

27%

8%

7%

10%

36%

$0.47

$0.17

5%

32%

12%

6%

31%

11%

TOTAL: $1.44 TOTAL: $1.76

$0.50 $0.12$0.10

$0.66

$0.18

1% 2%1%

$0.03$0.03

$0.07

$0.58$0.09

$0.11$0.07

$0.02

Privigen Gamunex-C/Gammaked Gammagard Octagam Gammagard Liquid Flebogamma Gammaplex Bivigam

Market Share

45%

34%

8%HI/SPP

5%

1.5%3%

3%

0.5%

31%

26%

7%

24%

Physician

3%

5%

2%2%

10%

18%

7%7%

36%

21%

Hospital OP

1%



2015 Medicare IG Utilization by Site of Service

FIGURE 45

Medicare IG Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 44

2014 20142015 2015

Privigen Gamunex-C/Gammaked Gammagard Octagam Gammagard Liquid Flebogamma Gammaplex

9%

24%

7%

6%

12%

41%

$0.55

$0.35

16%

44%

13%4%

17%

5%



23+27+24+13+22+19+24+2021+29+23+16+25+19+22+42 40+27+19+29+39+18+1942+26+15+22+35+21+21 Annual Cost per Patient

$40,986

$42,634

$27,037

$26,476

$19,682

$15,358

$29,361

$22,365

$39,406

$35,719

$18,334

$21,303

$19,027

$21,067

2015

2014Privigen

Privigen

Gamunex-C/Gammaked

Gamunex-C/Gammaked

Gammagard

Gammagard

Octagam

Octagam

Gammagard Liquid

Gammagard Liquid

Flebogamma

Flebogamma

Gammaplex

Gammaplex

$1.27

$0.26$0.05

$0.39

$0.20

1% 1% $0.02

$0.33

$1.42

$0.10

$0.12$0.27

$0.02

Privigen Gamunex-C/Gammaked Gammagard Octagam Gammagard Liquid Flebogamma Gammaplex

7%

24%

61%

10%

16%

8%8%

38%

20%

11%

27%

35%

23%


3%

2%


5% 2%




Ophthalmic injections had the largest annual trend of 30 percent and 39 percent for commercial and Medicare, respectively.

The significant PMPM trend in the category was a result of increased use based on positive results from the Protocol T study, confirming the efficacy of anti-VEGFs in the treatment of diabetic retinopathy.

Ophthalmic agents had a larger impact on the Medicare cat-egory at 11 percent of spend and only accounted for 1 percent of commercial PMPM. In Medicare, ophthalmic injections ranked as the second-highest spend category, equating to $5.25 of the total $46.01 PMPM spend. For both lines of business, ophthal-mic agents were administered almost exclusively in the physician office (see figures 46 and 49).• Medicare payers were more concerned with preferencing

ophithalmic agents, mostly through prior authorization (see figure 47).

• Lucentis and Eylea are included in the top 25 drugs for Medi-care (see figure 48).

• In looking at bevacizumab (Avastin) only for ophthalmic use, it accounted for the majority of market share in both commer-cial and Medicare. Eylea overtook Lucentis market share for commercial in 2015 but was 1 percent behind Lucentis in Medicare. However, the trend indicates that Eylea will surpass Lucentis in market share in 2016 (see figures 50 thru 53).

• What was most noteworthy for this category was the annu-al cost per patient for both commercial and Medicare which showed the cost of bevacizumab (Avastin) at 28 to 38 times lower than the higher cost agents (see figures 50 and 52).

OPHTHALMIC INJECTIONS

Ophthalmic Injections Product Preferencing (% of payers)

FIGURE 47

Commercial

Medicare

36+64+A36% 60+40+A60%

Ophthalmic Injections

FIGURE 46

2015 PMPM of Ophthalmic Agents

$0.31

$5.25

Commercial Medicare

30%2014-2015 PMPM

TREND


PMPM

39%2014-2015 PMPM

TREND


PMPM

(n=42 payers; 101 million lives)



2015 Example Ophthalmic Drugs by Cost per Claim and Unit by Site of Service

FIGURE 48

FIGURE 49

HOSPITAL HI/SPP PHYSICIAN HOSPITAL HI/SPP PHYSICIAN

Eylea $3,969 $1,932 $2,221 $2,036.58 $965.92 $1,045.67

Lucentis $2,680 $2,245 $1,791 $632.90 $431.79 $415.76


MEDICARE

COMMERCIAL

Eylea $2,211 — $2,089 $963.06 — $939.55

Lucentis $1,376 — $1,941 $305.81 — $396.01


0+2+983%

97% 0+2+983%

97%

Commercial Medicare

2014 2015 2014 2015

0+2+982%

98% 0+2+982%

98%


Ophthalmic Member Utilization by Site of Service 2014-2015

Lucentis bevacizumab (Avastin) Eylea


2015 Commercial Ophthalmic Utilization by Site of Service

FIGURE 51

Commercial Ophthalmic Utilization, PMPM, and Annual Cost per Patient 2014–2015

FIGURE 50

2014 20142015 2015



TOTAL: $0.23

TOTAL: $0.30

Annual Cost per Patient42+1+4738+1+47 $7,045

$7,318

$264

$330

$8,063

$9,172

2015

2014Lucentis

Lucentis

bevacizumab (Avastin)


Eylea

Eylea

$0.11

$0.02

$0.17

19%

59%

22%11%

61%

28%

$0.15

$0.07

$0.01

19%

59%

22%

25%

54%

21%

25%

12%

63%






2015 Medicare Ophthalmic Utilization by Site of Service

FIGURE 53

Medicare Ophthalmic Utilization, PMPM, and Annual Cost per Patient 2014–2015

FIGURE 52

2014 20142015 2015



TOTAL: $3.71

TOTAL: $5.20

Annual Cost per Patient42+1+47 48+1+4438+1+47 48+1+42 $9,374

$9,938

$226

$265

$8,659

$8,690

2015

2014Lucentis

Lucentis



Eylea

Eylea

19%

63%

18%

26%

69%

5%

$2.71

$0.24

$2.25

$2.99

$0.52$0.19



0%19%

63%

18%

8%

67%

25%




Rare diseases only affect an average of two pa-tients per 100,000, but constitute some of the most costly drugs on the medical pharmacy benefit.

Rare diseases, as defined in this report analysis, included anti-hemophilic factors (namely Factor VIII), enzyme-replacement ther-apy, Gaucher (Cerezyme), paroxysmal nocturnal hemoglobinuria (PNH) (Soliris), and Castleman disease (Sylvant). Although rare dis-eases covered multiple drugs across multiple categories, the lead-ing drugs in this combined category included Soliris, Cerezyme, and Factor VIII agents (antihemophilic factor (Recombinant)). Soliris and Cerezyme were two of the most expensive medical benefit agents on the market contributing to 9 percent of total commercial PMPM and 3 percent of Medicare PMPM (see figure 54). • Most rare disease agents were administered in the home infusion/

specialty pharmacy setting in commercial and the hospital outpa-tient setting in Medicare. Over the last five years, this has been variable, most likely due to the introduction of new agents in this category with varying methods of administration (see figure 57).

• Year over year, Soliris and Cerezyme utilization decreased in the home infusion/specialty pharmacy setting for commercial. In commercial, Soliris utilization increased 14 percentage points in the physician office setting and Cerezyme utilization increased 9 percentage points in the hospital outpatient setting (see figure 58).

• In Medicare, Factor VIII agents shifted utilization from the home infusion/specialty pharmacy to the hospital outpatient setting, potentially as a result of increased access to, and utilization of, hemophilia treatment centers (HTCs), and Soliris shifted all utili-zation to the hospital outpatient setting (see figures 59 and 61).

• The factor VIII products, antihemophilic factor (Recombinant) and Cerezyme, had more than two-thirds of the market share in commercial. In 2015, Cerezyme had complete market share in Medicare (see figures 59 thru 62).

RARE DISEASES

FIGURE 55

Example Rare Disease Product Preferencing (% of payers)

FIGURE 54

2015 PMPM of Example Rare Diseases

$0.90

$0.31

$0.56

$0.39

$0.62

$0.32

$1.32

$1.78

Commercial Medicare

Antihemophilic Factor

Enzyme Replacement Therapy

Soliris and Sylvant Total


PMPM

17%2014-2015

PMPM TREND

-18%2014-2015

PMPM TREND

3% OF TOTAL

MEDICARE PMPM

Antihemophilic Factor


Commercial Medicare

12+88+A12% 27+73+A27%

14+86+A14% 27+73+A27%





FIGURE 56

2015 Example Rare Diseases Drugs by Cost per Claim and Unit by Site of Service


Antihemophilic Factor (Recombinant) $13,248 $19,463 $15,692 $1.39 $2.52 $1.72

Soliris (PNH) $39,822 $23,141 $23,929 $434.44 $235.24 $231.48

Cerezyme (Gaucher) $27,049 $22,434 $16,804 $76.88 $42.12 $42.01

Antihemophilic Factor (Recombinant) $9,457 $8,394 — — $1.12 $0.91

Soliris (PNH) $21,285 — — — $214.93 —

MEDICARE

FIGURE 57

Rare Diseases Member Utilization by Site of Service 2014–2015



Example Rare Diseases Drug Utilization by Site of Service 2014–2015

FIGURE 58

2014 2015 2014 2015

67+24+967%24%

9% 61+28+1161%

11%

28% 43+43+1445%42%

13% 29+60+1129%

60%

11%

2014 2014 2014 2014 20142015 2015 2015 2015 2015

Commercial Medicare

Antihemophilic Factor (Recombinant)

Soliris SolirisCerezyme Antihemophilic Factor (Recombinant)

50%

50%

100%

80%

20%

100%

59%

38%

71%

29%

21%

41%

38%

30%

46%

24%

78%

16%

6%

79%

18%

3%3%


Commercial Medicare

COMMERCIAL


17+4+11+10+216+5+12+16+10+1+28Medica l Benef i t Ca tegory Ana lys i s

Commercial Gaucher Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 60

Commercial Factor VIII Utilization, PMPM, and Annual Cost per Patient PMPM 2014-2015

FIGURE 59

Antihemophilic Factor (Recombinant) Humate-P Koate Xyntha Alphanate Wilate Eloctate

Cerezyme Vpriv Elelyso



Allowed Amount PMPM

Allowed Amount PMPM

2014

2014

2014

2014

2015

2015

2015

2015

4%

77%

18%

21%

72%

2%

2%$0.03

$0.03

$0.51

$0.24

1%1%4%7%

3%

19%

29%

64%

68%

TOTAL: $0.58

TOTAL: $0.27

TOTAL: $0.57

TOTAL: $0.25

$0.02

$0.03$0.04

$0.02

$0.42

$0.06

$0.04

$0.17

3%$0.03$0.01

$0.02



$167,206

$161,293

$40,301

$46,917

$108,539

$117,025

$99,472

$157,150

$14,138

$100,851

$18,334

$7,409

$275,079

$275.079

2015

2014Antihemophilic Factor (Recombinant)


Humate-P

Humate-P

Koate

70+33+1551+46+100 $341,793

$259,483

$157,150

$161,117

$230,570

$65,128

$483,242

2014

2015

Cerezyme

Cerezyme

Vpriv

Vpriv

Elelyso

Elelyso

Koate

Alphanate

Wilate

Eloctate

Eloctate

Xyntha

Xyntha

Alphanate



4%

17+4+11+10+216+5+12+16+10+1+28 $0.04

Medicare Gaucher Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 62

Medicare Factor VIII Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 61

2014

2014

2014

2014

2015

2015

2015

2015

Antihemophilic Factor (Recombinant) Humate-P Koate Xyntha

Cerezyme



Allowed Amount PMPM

Allowed Amount PMPM



50%

$0.04

$0.06

13%

$0.0225%

$0.04

$0.07

38%

100%

$0.01

TOTAL: $0.51


TOTAL: $0.28

70+33+1551+46+100

13% 13%

$0.03

25%

$0.35

25%

8+7+12+1004+2+7+50 $126,551

100$294,840

2014

Cerezyme95$249,480

$157,150

2015

Cerezyme

$870,218

$69,331

$111,967

$8,228

$191,387

$870,218

$125,518

$353,270

2015

2014Antihemophilic Factor (Recombinant)


Humate-P

Xyntha

Humate-P

Koate

Koate

Xyntha

100%


$0.20



Despite recent questions regarding the clinical effectiveness of viscosupplementation, and the debate throughout the managed care community about whether or not to cover these agents, viscosupplementation continued to be a top spend category in both commercial and Medicare.

Viscosupplementation agents, or treatment with hyaluronic acids (HAs) for osteoarthritis of the knee, made up two percent of Medicare PMPM spend and ranked seventh on the Medicare medical pharmacy benefit spend categories. The trend was negative in this category most likely due to the 2013 American Academy of Orthopedic Surgeons Guidelines (see figure 63).

• Close to two-thirds (60 percent) of payers preferred products within this category (see figure 64).

• Viscosupplementation agents are most often administered in the physician office in both commercial and Medicare. Viscosupplementation agents are commonly dispensed through a specialty pharmacy in commercial but rarely done so in Medicare (see figure 66).

• Orthovisc had the largest market share in commercial, but Euflexxa and Synvisc/Synvisc-One had similar market share. In Medicare, Euflexxa had close to half (46 percent) of market share (see figures 68 and 70).

VISCOSUPPLEMENTATION


Viscosupplementation

FIGURE 63

2015 PMPM of Viscosupplementation

$0.21

$0.88

Commercial Medicare

Viscosupplementation Product Preferencing (% of payers)

FIGURE 64

Commercial Medicare

60+40+A60% 60+40+A60%

-12%2014-2015 PMPM

TREND


PMPM

-3%2014-2015 PMPM

TREND


PMPM




COST PER CLAIM

2015 Example Viscosupplementation Drugs by Cost per Claim and Unit by Site of Service

FIGURE 65

FIGURE 66

FIGURE 67

COST PER UNIT

Example Viscosupplementation Drug Utilization by Site of Service 2014-2015


93%96%

2%2%

6%23%

1%

76%

15%

1%

84%

10%3%

87%

11%3%

86%89%

9%2% 1% 4%

1%

95%

4%3%

93%

4%7%

89%

3%1%

96%

1%1%

98%

Viscosupplementation Member Utilization by Site of Service 2014-2015


Euflexxa $627 $1,059 $261 $498 $262 $179

Synvisc/Synvisc-One $1,374 $1,452 $583 $40 $22 $15

Gel-One $1,249 $1,218 $908 $1,124 $953 $705

COMMERCIAL

Euflexxa $204 $1,157 $275 $153 $331 $192

Synvisc/Synvisc-One $542 $1,543 $548 $13 $24 $12

Gel-One $1,117 $1,000 $725 $559 $1,000 $464

MEDICARE

Commercial Medicare

Commercial Medicare

HI/SPP

Hospital

Physician

2014 2015 2014 2015

13+1+8610+1+89 1+5+943+2+9513% 10%

3% 5%2%

95% 94%

1% 1%1%

86% 89%

2014 20142014 20142014 20142015 20152015 20152015 2015

Euflexxa Synvisc/Synvisc-One Gel-One Euflexxa Synvisc/Synvisc-One Gel-One


HI/SPP

13%

16%

16%

46%

5%

4%

Hospital

25%

25%

9%

32%

8%

1%

Physician

17%

23%

30%

25%

3%2%


Commercial Viscosupplementation Utilization, PMPM, and Annual Cost per Patient 2014-2015

FIGURE 68


2014 20142015 2015

Hyalgan/Supartz Euflexxa Orthovisc Synvisc/Synvisc-One Gel-One Monovisc



16%

28%

27%

26%

17%

22%

30%

26%

2%3%

3%

$0.06

$0.07

$0.07

$0.03

$0.01

$0.06

$0.06

$0.01

$0.03

$0.01

$0.04

34+36+46+48+43 $729

$971

$919

$770

$1,013

2014

Hyalgan/Supartz

Orthovisc

Gel-One

Euflexxa

Synvisc/Synvisc-One19+18+24+30+29+48 $855

$969

$1,069

$835

$1,081

$1,459

2015

Hyalgan/Supartz

Orthovisc

Gel-One

Euflexxa

Synvisc/Synvisc-One

Monovisc

Utilization by members

2015 Commercial Viscosupplementation Utilization by Site of Service

FIGURE 69




HI/SPP

11%

19%

24%

41%

4%1%

Hospital

27%

40%

7%

25%

1%

Physician

15%

46%

12%

21%

5%1%

Medicare Viscosupplementation Utilization, PMPM, and Annual Cost per Patient PMPM 2014-2015

FIGURE 70



2014 20142015 2015


2015 Medicare Viscosupplementation Utilization by Site of Service

FIGURE 71




34+36+46+48+43 29+34+43+48+38 $619

$913

$808

$759

$996

2014

Hyalgan/Supartz

Orthovisc

Gel-One

Euflexxa

Synvisc/Synvisc-One19+18+24+30+29+48 19+30+33+37+30+48 $534

$917

$823

$803

$979

$1,335

2015

Hyalgan/Supartz

Orthovisc

Gel-One

Euflexxa

Synvisc/Synvisc-One

Monovisc

14%

35%

16%

33%

2%

15%

46%

12%

22%

5%

$0.09

$0.29

$0.16

$0.35

$0.01

$0.09

$0.39

$0.11

$0.23

$0.01$0.04



Medica l Benef i t Managment

Controlling the cost of medical benefit drugs is a difficult task due to the ever-evolving landscape of specialty medications and continued influx of new drugs and indications. To control the costs of specialty drugs, in 2016, health plans implemented several methods of medical benefit drug manage-ment. Many of these methods mirrored that of the pharmacy benefit with step edits, prior authorization (PA), and rebating. Others differentiated themselves from the pharmacy benefit such as post- service, pre-payment claim edits (PSCE), clinical pathways, or care management programs. Commercial health

plans were more easily able to preference products compared to Medicare.

Short of a drug formulary, health plans may preference a med-ical benefit product within a disease category through tools such as policy criteria, provider reimbursement, step edits, etcetera. In 2016, for commercial payers, 86 percent of health plans, which made up 93 percent of lives, had some form of product preferenc-ing in place. For Medicare, product preferencing was less com-mon. Only 39 percent of health plans, representing 42 percent of lives, engaged in product preferencing (see figure 72).

2016 Payers with Medical Benefit Product Preferencing

FIGURE 72

(n=49; 109 million lives)

Commercial(n=38; 85 million lives)

Medicare

Product Preferencing

Yes No

39+61+A61%

39%

42+58+A58%

42%

% of Lives93+7+A86+14+A86%

14%

93%

7%

% of Lives

Medical Benefit Drug Management

% of Payers % of Payers


Plan size, regardless of line of business, was not as much of a factor in 2016 in the practice of product preferencing. In the commercial pop-ulation, 82 percent of small (less than 500,000 lives) and 89 percent of large plans (more than 500,000 lives) engaged in this practice. In Medicare, there was a slight uptick in larger plans, but both segments were closely practiced in preferencing with 35 percent of small and 43 percent of large plans managing the benefit (see figure 73).

Commercial Medicare

(n=49; 109 million lives) (n=38; 85 million lives)

82+18+U82% 35+65+U35%89+11+U89% 43+57+U43%88+80+52+73+45+67+60+60+45+60+40+60+43+60Biologic Drugs for Autoimmune Disorders

Colony-Stimulating Factors (CSFs)

Bone Resorption Inhibitors: Osteoporosis


Multiple Sclerosis

Botulinum Toxins

Erythropoiesis-Stimulating Agents (ESAs)

FIGURE 74

2016 Medical Benefit Top Disease States or Drug Categories With Product Preferencing

Less than 500,000 lives Less than 500,000 lives500,000 lives and up 500,000 lives and up

FIGURE 73

2016 Payers with Medical Benefit Product Preferencing by Plan Size (% of payers)

80%

88%

60%

45%

60%

60%

40%

60%

43%

60%

73%

52%

67%

45%

Across both commercial and Medicare pay-ers, biologic drugs for autoimmune disorders were managed at the highest rates. Due to the breadth of this category and the introduction of a biosimilar for Remicade in 2016, health plans within commercial and Medicare lines of busi-ness were potentially able to control utilization of these drugs, and providers were able to choose lower cost options with similar results. Other top-five categories highly managed across both commercial and Medicare included colony- stimulating factors (52 percent in commercial and 73 percent in Medicare) and osteoporosis agents (45 percent in commercial and 67 per-cent in Medicare) (see figure 74).

Rounding out the top five for each line of business were viscosupplementation and multi-ple sclerosis in commercial, and botulinum tox-ins and erythropoiesis-stimulating agents (ESAs) in Medicare.



+70+51 +20+33 19+16 +12+010+5 +10+13 +8+0+6+3 +5+0+3+ +3+Medica l Benef i t Managment

Medical benefit product preferencing most often came in the form of prior authorization. Commercial payers indicated higher levels of management of the medical benefit with al-most three-fourths (70 percent) of commercial payers versus little more than half (51 percent) of Medicare payers using prior authorization tools to manage the medical benefit, although it should be noted that 74 percent of respondents indicated they use the same management tools for Medicare as commercial (see figure 75).

Even with the heavy use of prior authoriza-tion, some commercial payers take a “hands-off” approach to managing medical benefit drugs. Close to one-quarter (20 percent) of com-mercial payers used no management tools. For both commercial and Medicare payers, a sec-ondary method of management was care/case management programs (19 percent and 16 per-cent, respectively). For those Medicare payers who did not use the same tools across the same disease states (n=8), use of claim edits occurred at a higher rate than in commercial.

Utilization of Management Tools

FIGURE 75

2016 Utilization Management Tools for Commercial and Medicare (% of payers)

Prior Authorization

None

Care Management (i.e., Disease Management or Case Management)

Step Edit Requirements

Site of Service

Post-Service Claim Edits

Dose Optimization

Clinical Pathways

Patient Adherence Program

Other (Clinical Detailing, Age Edits)

Differential Provider Reimbursement by Drug in Therapy Class

Commercial (n=49; 109 million lives) Medicare (n=8; 33 million lives)

of commercial payers and 33% of Medicare payers did not use any management strategies for medical benefit drugs.

70%

51%

20%

33%

12%

19%

10%

10%

13%

8%

3%

6%

5%

3%

5%

3%

20%

16%


+70+51 +20+33 19+16 +12+010+5 +10+13 +8+0+6+3 +5+0+3+ +3+ Appropriate use (ICD-9/10)

Dose

Laboratory tests and results

Duration of therapy

Previous member therapies

Member’s disease state and severity

Genetic testing requirements and results

Frequency

Concomitant therapies

Renewal criteria with objective assessments

Dose optimization

Drug-specific monitoring

89+89+85+83+83+79+77+74+68+53+47+45Prior Authorization and Post-Service Claim Edits

FIGURE 76

2016 Prior Authorization Submission Types (% of payers)

87+13+U87%Fax

47+53+U47%Web/online portal

40+60+U40%Phone

4+96+U4%Other

[Internal EMR,Pharmacy manages]

(n=47; 10.3 million lives)

As indicated, two types of medical benefit management programs in use for medical phar-macy were prior authorization and post-service claim edits. Prior authorization occurs before the initiation of therapy, whereas post-service claim edits are an adjudication process occur-ring once the claim has been submitted. Over the last few years, web-based technologies have reshaped these approaches to be more- efficient cost-saving tools but they are still in tran-sition. In 2016, 47 percent of payers took ad-vantage of web-based online portals for their prior authorization programs but based on cur-rent practices, 87 percent of payers continued to accept faxed submissions (see figure 76).

FIGURE 77

2016 Prior Authorization Submission Approval Criteria(% of payers) (n=47; 99 million lives)

85%

89%

89%

83%

83%

79%

77%

74%

68%

53%

47%

45%

Payers most often (89 percent) made prior authorization coverage decisions by examining if the treatment met appropriate use conditions based on ICD-9 or ICD-10 diagnosis codes. Appropriate dosage was utilized with the same frequency at 89 percent. Almost equal-ly important, 85 percent of payers required lab results while 83 percent required duration of therapy and the patient’s history with previous therapies (see figure 77).



Payers indicated denial of a prior authorization results in appeal of that decision on average 9 percent of the time with 49 percent stating they have an appeal rate of 6 percent or less. Rarely (5 percent), health plans experienced an appeal rate higher than 20 percent (see figure 78).

Prior authorizations were not limited to existing therapies with classified HCPCS codes. Eighty-four percent of payers implemented a PA for newly released medical benefit drugs. This occured quickly for the majority of payers (56 percent) within 1 month of product launch (see figure 79).

When assessing post-service claim edits, 69 percent of payers evaluated the listed indication and 62 percent of payers evaluated claim to matching authorization when approving a claim. More than half of payers (54 percent) assured the dose and frequency matched, dose per day, and dose over time were accurate (see figure 80).

Although 53 percent of payer respondents representing both commercial and Medicare were unaware of the denial rate for post-service claim edits after criteria were reviewed, in total, 47 percent of payers indicated that, on average, 6.5 percent of claims are denied post submission (see figure 81).

As with prior authorizations, payers indicated that they would go through the process of a post-service claim edit with newly released medical benefit drugs, although at lower rates. Over one-third (39 percent) of payers performed a post-service claim edit on medical benefit drugs that did not have an assigned, classified J-code (see figure 82).

2016 Prior Authorization Denial Appeal Rate (% of payers)

FIGURE 78

0-3% 4-6% 7-10% 11-13% 17-20% More than 20%

19% 16% 14% 16% 5%30%

86+14+A

FIGURE 79

2016 Prior Authorization Submission Process and Timeline for Newly Released Medical Benefit Products

Yes

No % of payers

16%

84%

PA for Newly Released


56+44+U56% 29+71+U29% 12+88+U12% 2+98+U2%

Within1month 1-3 months 4-6 months 7-9 months

PA Implementation Time for Newly Released Drugs (% of payers)


+69+62+54+54+54+46+38+38+31+31+23+23+8(n=47; 99 million lives)


PSCE Performed on Newly Released Products

+69+62+54+54+54+46+38+38+31+31+23+23+8FIGURE 80

2016 Post-Service Claim Edits Reviewed Elements (% of payers) (n=13; 16 million lives)


69%

62%

54%

54%

54%

46%

38%

38%

31%

31%

23%

23%

8%


FIGURE 81

PSCE Net Denial Rate Commercial and Medicare (% of payers)

FIGURE 82

of payers had a 7-10% PSCE denial rate

31%

0-3% 4-6%

7-10% Don’t know

8%

8%

31%

53%

39+43+18+A 39%

43%

18%

Yes

No

Don’t Know % of Payers

Indication

Claim to authorization matching

Claim to authorization matching (on dose and frequency)

Dose per day

Dose over time

Gender

Age

Frequency

Combination indications (e.g., 2 or more appropriate ICD-10s per claim line)

Duration

Cost

Loading Dose

Concomitant therapies

47%


95%

5%

97%

3%

Commercial Medicare

95%

5%


Member Cost ShareBenefit Design

Payer management of medical benefit drugs includes member cost share for both commercial and Medicare. The majority of members were responsible for paying a coinsurance when obtaining their medical benefit treatment, but payers still utilized the copay model. In 2016, 51 percent of commercial payers required coinsurance to cover member cost share, an increase from 49 percent in 2015 and 46 percent in 2014. There was a slight decrease in payers requiring a copay from 34 percent in 2015 to 33 percent in 2016. Commercial payers have moved away from the option of no member cost share, decreasing this option by 9 percentage points (36 percent) since 2014. More than two-thirds of Medicare members (68 percent) are responsible for a coinsurance (see figure 83).

Total member cost share is not limited to a coinsurance or copay. Members are often responsible for a deductible that must be met before the payer starts remuneration. In total, taking into account coinsurance, copay, and deductible, members using a medical benefit drug paid 3 percent of total medical costs in commercial and 5 percent in Medicare (see figure 84).

FIGURE 83

Medical Benefit Member Cost Share Type 2014-2016 (% of payers)

20152014 2016 2016

Coinsurance % Copay $ Require Neither

FIGURE 84

Medical Benefit Percentage of Spend for Member versus Payer 2014–2015 Payer Spend Member Spend

51%of commercial and 68% of Medicare payers required coinsurance in 2016

Commercial (n=49, 109 million lives)

Medicare (n=38, 86 million lives)

46%

29%

25%

49%

34%

17%

51%

33%

16%

68%

16%

16%

98%

2%

Commercial Medicare

2014 2015


Aligning with payer survey responses, very little member responsibility is compromised from copays. For commercial, most member out-of-pocket spend occurs due to their deductible and coinsurance requirements. For Medicare Advantage plans, almost all member medical benefit drug expenses are from coinsurance requirements (see figure 85).

In addition to member cost share responsibility, narrowing

2015 Member Cost Share Rates for Medical Benefit Drugs by Site of Service

FIGURE 85

Commercial

COPAY PMPM DEDUCTIBLE PMPM

COINSURANCE PMPM

HI/SPP $0.00 $0.02 $0.04

HOSPITAL OP $0.01 $0.10 $0.17

PHYSICIAN $0.01 $0.16 $0.13

Total PMPM $0.03 $0.28 $0.34

Medicare

COPAY PMPM DEDUCTIBLE PMPM

COINSURANCE PMPM

HI/SPP $0.00 $0.00 $0.07

HOSPITAL OP $0.00 $0.01 $0.82

PHYSICIAN $0.00 $0.03 $1.43

Total PMPM $0.01 $0.04 $2.31

of network providers was a potential cost-saving and quality-improvement strategy for payers. In 2016, this was not a strategy for the majority of payers with only one-quarter (25 percent) of health plans implementing a narrow network for their members. Of those who did not have this requirement in 2016, another quarter indicated that they planned to implement narrow networks within the next year (see figure 86).

FIGURE 86

Current and Anticipated Narrow Network Management Approach

Yes No Don’t Know

24+70+6+t25%

69%

6%

% of Payers 24+68+8+t23%

68%

9%

% of Payers

Implemented Plan to Implement in the Next 12 Months(n=49; 109 million lives) (n=34; 80 million lives)




Variable Member Cost Share

FIGURE 87

FIGURE 88

Landscape of Varying Cost Share by Drug (% of payers)

Landscape of Varying Cost Share by Site of Service (SOS) (% of payers)

Although standard on the pharmacy benefit, payers do not typically vary member cost share requirements by drug to drive members to a preferred product under the medical benefit. Only 14 percent of payers varied cost share by drug. Even so, of the few payers engaging in this strategy, 57 percent experienced out-comes of more thoughtful prescribing and increased use of pre-ferred drugs (see figure 87). For the 84 percent not engaging in this strategy, one-third (33 percent) knew their organization had the capability to implement variable cost share by drug.

More common, but still rare, was the payer’s ability to vary cost share based on site of service (i.e., physician office, home

via home infusion, and hospital outpatient facility). Close to one-quarter (24 percent) of payers varied member cost share based on the site of service. For those payers who did not vary cost share by provider type, or were unaware, more than half (51 percent) felt it was possible for their organization to under-go such a model (see figure 88). For payers who are varying by site of service, 75 percent cited outcomes including significant savings in IVIG home infusion and an overall increase in home infusion utilization.

14+84+2+t 33+48+19+t

51+27+22+t

57+43+t

75+25+t

84% 57%

75%

48%

27%

33%

51%

19%

22%

43%

25%

14%

24+76+t24%

76%

2%

Yes No Don’t Know

Yes No Don’t Know

Capability to Vary Cost Share by Drug

Capability to Vary Cost Share by SOS

Experienced Outcomes

Experienced Outcomes

Varied Cost Share by Drug

Varied Cost Share by SOS








RebatesTo complete the picture of medical benefit

management, commercial rebates should also be considered. Overall, payers indicated a discount of 18 percent for most medical benefit drugs would be considered sufficient value to preference a product.

When it comes to rebates, specifically by cat-egory, 67 percent of payers received a rebate for biologics used to treat autoimmune disorders. Less than half of payers received discounts for additional medical benefit drug categories, with discounts occurring most often within viscosup-plementation, ESAs, CSFs, and contraceptives categories. For the remaining categories de-tailed in the appendix, one-quarter (26 percent) or less received rebates for a given category (see figure 89 and appendix figure A32).

18%Average discount to consider preferring a medical benefit drug

FIGURE 89

Top Five Medical Benefit Rebated Categories (% of payers)

+67+45+40+38+31Biologic Drugs for

Autoimmune DisordersViscosupplementation Erythropoiesis-

Stimulating Agents (ESAs)


Contraceptives


67%

45%

40%38%

31%

Capability to Vary Cost Share by Drug


Medica l Benef i t P rov ider Landscape

FIGURE 90

2015 Medical Pharmacy Index to ASP

Commercial Medicare

Our review of the medical benefit provider landscape includes all outpatient sites of service. Dependent on the treatment category or administration, each site of service can be the lowest cost option, but overall the hospital outpatient setting is typically the highest cost setting for administration of medical benefit drugs. Consistent with previous years’ reports, we continue to see a trend of care shifting away from the physician office setting and toward hospital outpatient facilities. There are several reasons why this may be occurring including practice consolidation, decreased reimbursement to physician offices, and large health systems continuing to expand and acquire provider groups and services.

In 2015, as illustrated earlier in figures 3 and 4, 52 percent of commercial members received their provider-administered

Medical Benefit Provider Landscape


injectable or infused drug in the hospital outpatient setting, accounting for 52 percent of the overall spend. Higher trend in hospital outpatient drug spend is evidenced in the index to ASP (statistical measure of ASP change) by site of service. ASP index is two times higher in the hospital outpatient setting at 2.9 than in the physician office setting at 1.4 (see figure 90).

For Medicare, figures 3 and 4 show 74 percent of Medicare members received their provider-administered injectable or infused drug in the physician office setting, with their spend in that setting of 55 percent. The shift in utilization in the hospital outpatient setting, where 23 percent of members received care, was up from 17 percent in 2014. This shift has smaller spend consequences, however, as the index to ASP in Medicare is close to equal across all sites of service.


1.2 1.2 1.21.1

1.4

2.9

14+15+15+16 10+10+10+9 56+60+70+86Reimbursement across these sites of service

varies based on payer pricing structure and other industry practices. Typically, physician offices and home infusion sites are reimbursed under an ASP plus X percent methodology usually closely related to the Medicare allowable (ASP plus 6 percent). Specialty pharmacies are typically reimbursed under an AWP minus a discount model, and hospital outpatient facilities are typically reimbursed via percent of charges. The 2016 payer survey reflected the continuity of these reimbursement models.

In the physician office setting, 62 percent of covered lives were reimbursed under an ASP plus markup model. Although the markup varies from payer to payer, the weighted markup was in line with the Medicare allowable at 7 percent. While 23 percent of payers’ covered lives were under an AWP minus model, the weighted rate was a discount of 15 percent most commonly; and the few payers (1 percent) who reimbursed under a percent of charges model, on average, reimbursed at a weighted 61 percent of the charges. Other reimbursement models, reflected across all sites of service, included capitated, ASP minus a discount, or a combination of both ASP and AWP models assumingly based on the drug (see figure 91).

In the hospital outpatient setting, 54 percent of covered lives had their services reimbursed under a percent of charges model. This was down from 63 percent in 2015. The weighted percent of charges rate was slightly higher than that of the physician office at 67 percent. Although 13 percent of covered lives were under other reimbursement models, 17 percent were under an AWP minus and 16 percent were under an ASP plus model. The weighted percent discount averaged 15 percent, exactly that of the physician office; and the weighted ASP plus rate was higher than that of the physician office and the Medicare allowable at 8 percent (see figure 91).

In the home infusion setting, the model was more evenly split between AWP minus and ASP plus at 40 percent and 47 percent, respectively. For the rarely used percent of charges model, the weighted percent averaged 76 percent, much higher than either the hospital outpatient or physician office setting (see figure 91).

AWP Minus X% ASP Plus X%

Percent of Charges Other

FIGURE 91

2016 Commercial Reimbursement Methodology (n=49 payers; 109 million lives)

Physician Office

Home Infusion

Hospital Outpatient

Specialty Pharmacy

23%

62%

14%

1%

17%

16%

13%

54%

40%

47%

12%1%

In the specialty pharmacy setting, the majority of covered lives (68 percent) were under an AWP minus model with an average weighted discount of 11 percent. Similar to the physician office setting, the 19 percent of covered lives under the ASP plus model averaged a weighted percent markup of 7 percent (see figure 91).

Provider Reimbursement — Commercial

% of Lives Avg. AWP Minus Discount (Weighted Mean)

Avg. ASP Plus Markup (Weighted Mean)

Avg. Percent of Charges (Weighted Mean)

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

14%

15%

15%

16%

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

56%

60%

70%

86%

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

10%

10%

10%

9%

68%

19%

12%1%

(15%)

(15%)

(17%)

(11%)

(61%)

(67%)

(76%)

(86%)

(7%)

(8%)

(7%)

(7%)



62%

13%

Provider Reimbursement — Medicare

Although Medicare Advantage medical benefit lives are subject to rate fluctuation similar to commercial lives, Centers for Medicare and Medicaid Services (CMS) rules regarding Medicare allowable rates often dictated the reimbursement model and level across all sites of service. Medicare reimbursement in the physician office and hospital settings were more often an ASP plus model. Payers more often chose an AWP minus discount in the home infusion and specialty pharmacy settings.

Again, consistent with CMS Medicare reimbursement rules, the average weighted reimbursement was close to ASP plus 6 percent across all sites of service. (see figure 92).

Yes No

Don’t Know 2+98+u2%

98%

% of Payers 19+44+37+u39%19%

44%

% of Payers

FIGURE 93

Reimbursement by Indication (% of payers)

Reimburse by Indication Capability to Reimburse by Indication

FIGURE 92

2016 Medicare Reimbursement Methodology

24%

2%

5%

12%

81%

48%

38%

2%

12%

19%

48%

20%

12%

Although possible as technology progresses and more biosimilars emerge in the market, payers did not reimburse by indication. Only 2 percent of payers reimbursed medical benefit drugs by indication with 19 percent of payers having the capability to implement this form of reimbursement (see figure 93).

13+16+15+17 7+12+8+8 80+42+33+60Avg. AWP Minus Discount (Weighted Mean)

Avg. ASP Plus Markup (Weighted Mean)

Avg. Percent of Charges (Weighted Mean)

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

13%

16%

15%

17%

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

80%

42%

33%

60%

Physician Office

Hospital Outpatient

Home Infusion

Specialty Pharmacy

7%

12%

8%

8%

AWP Minus X% ASP Plus X%

Percent of Charges Other

Physician Office

Home Infusion

Hospital Outpatient

Specialty Pharmacy

% of Lives

(14%)

(14%)

(16%)

(17%)

(80%)

(48%)

(33%)

(44%)

(7%)

(6%)

(6%)

(7%)

1%



13+16+15+17 7+12+8+8 80+42+33+60

Medical pharmacy provider reimbursement consists of drug reimbursement as well as the cost to administer the drug. In commercial and Medicare, the most costly administration was the administration of intravenous chemotherapy infusion for up to one hour. (see figures 94 and 95). For medical benefit drug administration, the hospital outpatient setting was again typically

FIGURE 94

2015 Top Five Commercial Administrative Codes by Allowed Amount PMPM and Unit Cost

FIGURE 95

2015 Top Five Medicare Administrative Codes by Allowed Amount PMPM and Unit Cost

Administrative Code Reimbursement

CPT CODE CPT DESCRIPTION HOSPITAL OUTPATIENT

PHYSICIAN OFFICE

TOTAL PMPM HOSPITAL OUTPATIENT

PHYSICIAN OFFICE

96413 Chemotherapy administration, intravenous infusion technique; up to 1 hour, single or initial substance/drug

$0.60 $0.24 $0.85 $608.58 $209.78

96375 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); each additional sequential intravenous push of a new substance/drug

$0.34 $0.03 $0.37 $142.03 $35.28

96365 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); initial, up to 1 hour

$0.33 $0.08 $0.41 $402.48 $91.76

96374 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); intrave-nous push, single or initial substance/drug

$0.24 $0.01 $0.26 $209.35 $75.85

96361 Intravenous infusion, hydration; each additional hour $0.21 $0.01 $0.21 $114.98 $22.46

CPT CODE CPT DESCRIPTION HOSPITAL OUTPATIENT

PHYSICIAN OFFICE

TOTAL PMPM HOSPITAL OUTPATIENT

PHYSICIAN OFFICE


$0.87 $0.37 $1.23 $295.33 $146.09


$0.34 $0.09 $0.43 $179.82 $72.24

96372 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcuta-neous or intramuscular

$0.17 $0.23 $0.40 $52.62 $24.23

96367 Intravenous infusion,for therapy, prophylaxis, or diagnosis (specify substance or drug); additional sequentialinfusion of a new drug/substance, up to 1 hour

$0.15 $0.09 $0.25 $55.52 $31.58


$0.14 $0.05 $0.18 $40.99 $22.72

ALLOWED AMOUNT PMPM

ALLOWED AMOUNT PMPM UNIT COST

UNIT COST

Due to rounding to the nearest cent, the Total PMPM coulumn may not add up accurately.

Due to rounding to the nearest cent, the Total PMPM coulumn may not add up accurately.

the most costly. For chemotherapy administration, the PMPM and unit cost in the hospital outpatient was more than double that of the physician office. Unit cost in the hospital outpatient setting was overall higher than in the physician office (See appendix A33 thru A35 for full chart).


Medica l Benef i t P rov ider Landscape 33+23+12+17+16+8+33+34+16+6+4+21+43+40 Yes No Don’t Know

ASP Plus X% AWP Minus X% Comparable Drug Profit to Reference Product Medicare Model (WAC+6% then ASP plus 6% of reference products) Other Strategy

FIGURE 97

2016 Biosimilar Reimbursement Methodology

25+17+25+17+16+u17%

25%

25%

17%

16%

% of Payers

24+72+4+u4%24%

72%

% of Payers 31+63+6+u6%

31%

63%

% of Lives

Biosimilar Reimbursement Strategy

As of January 2017, two biosimilars were available on the market. Payers started to implement strategies to reimburse the use of current biosimilars and biosimilars not yet on the market. Close to one-quarter of payers (24 percent), representing 31 percent of lives, had a defined biosimilar strategy in 2016. Of the payers with a current biosimilar strategy, 25 percent used an ASP plus markup model or a comparable drug profit to reference product. At the lives level, closer to half (46 percent) of lives were settled under a model that reimbursed based on comparable drug profit to the reference product (see figures 96 and 97).

FIGURE 96

2016 Defined Biosimilar Strategy(n=49; 109 million covered lives)

(n=12; 33 million covered lives)

86% 6% 8%

FIGURE 98

2016 Biosimilar Interchangeability (% of payers) (n=49; 109 million covered lives)

17+2+46+5+30+u46%

5%

30%17%

% of Lives

2%

Don’t Know

Yes No

The majority of payers (86 percent) indicated that if a biosimilar was available and had the same FDA-labeled indication as the reference drug, they would consider preferring the product whether the FDA deemed it interchangeable or not (see figure 98).


Bundled Payments

Clinical Pathways-Based Payments

Episodes of Care

Value-Based Contracting

Variable Fee Schedule

Other*

None of the above

24+76+x33+23+12+17+16+8+33+34+16+6+4+21+43+40Alternative Payment Models

With the advent of the Oncology Care Mod-el (OCM) to reduce the cost of specialty drugs, payers continued to implement alternative pay-ment models to manage this spend. On aver-age, 24 percent of a payer’s provider network utilized alternative payment models in their prac-tices (see figure 99).

Although 46 percent of payers indicated it was too early in the process to understand any savings they may have experienced from alter-native payment models, 40 percent of payers indicated they had experienced some level of savings from the use of alternative payment mod-els (see figure 100).

In 2016, 43 percent of payers had not yet im-plemented any type of alternative payment mod-els, although one-third (33 percent) implemented bundled payments or value based contracting models for their providers (see figure 101).

Average Percent of Providers Using Alternative Payment Models

FIGURE 101

Alternative Payment Models Implemented in the Last 12 Months (n=49; 109 million lives)

% of Payers

% of Lives


40%

43%

21%

4%

6%

16%

33%

34%

8%

16%

17%

12%

23%

33%

FIGURE 99 FIGURE 100

Savings From Alternative Payment Models Implemented in the Last 12 Months (% of payers)

39+14+47+x Yes No Don’t Know

40%

14%

46% % of Payers


24%Average

*Risk-based payments for total cost of care performance; capitation


Medica l Benef i t P rov ider Landscape35+18+36+17+28+13+26+10Hematology (n=21)/(n=16)

Oncology (n=22)/(n=16)

Rheumatology (n=17)/(n=13)

Urology (n=14)/(n=12)

Hospital Acquisitions of Office-Based Practices

More than 10 years since the implementation of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), 50 percent of payers were still seeing the purchase of practices by hospital systems. This number was down from the overall previous 10 years, when 69 percent of payers indicated office-based purchases by hospitals (see figure 102).

Payers indicated that since 2005, 36 percent of their network oncology practices, and 35 percent of their network hematology practices, had been purchased by hospitals. Closer to one-quarter of rheumatology and urology practices, 28 percent and 26 percent, respectively, were purchased since 2005. More hematology practices within a provider network were purchased over the last year than oncology practices, 18 versus 17 percent (see figure 103).

69+22+9+u50+25+25+u8%

69%23%

Since 2005 50%

25%

25%

In Last 12 months

FIGURE 102

Office Based Practices in Payer’s Network Purchased by Hospital Systems (% of payers)


Yes No Don’t Know

FIGURE 103

Percentage of Office-Based Practices Purchased by Hospital Systems (% of lives)

Since 2005 In Last 12 Months

35%

18%

36%

17%

28%

13%

26%

10%


Oncology Drug Prior Authorization

Clinical Pathways

Episode-of-Care or Bundled-Payment Methodologies

Differential Reimbursement (Paying oncologists a higher percentage markup on lower cost or generic drugs in a specific therapy class)

Other*

Reimbursing Most Efficacious Medications at a Higher Percentage Markup

Reimbursing physician offices a separate infusion fee (in addition to drug and admin reimbursements)

Oncology-Specific Accountable Care Organization

Oncology-Specific Patient-Centered Medical Home

Value-based reimbursement models (e.g., incremental payment to providers for improved outcomes)

40+43+20+32+12+11+9+0+9+5+6+0+6+11+3+0+3+5+3+5 41%

6%

6%

12%

18%

82%

67%

22%

18%

11%

22%

11%

89%

24%35+18+36+17+28+13+26+10 Oncology Landscape 2016 Oncology-Specific Pilot Programs Initiated

by Payers

Commercial (n=17; 71 million lives) Medicare (n=9; 27 million lives)

FIGURE 104

35%of commercial payers

had oncology specific programs.

24%of medicare payers

had oncology specific programs.

*Capitation; use of internal delivery system

One-third (35 percent) of commercial payers had oncology specific medical benefit programs. The most common management strategy in 2015 was prior authorization, with 82 percent of payers reporting this as a strategy they used. The second most common, at 41 percent, was a clinical pathways program (see figure 104).

Close to one-quarter (24 percent) of payers with Medicare lives provided oncology specific medical benefit programs. For the few payers providing these programs, 89 percent had an oncology prior authorization program and 67 percent had a clinical pathways program (see figure 104).

(% of payers)

11%

12%

6%



Capture of Data

Storage of Data

Report of utilization Data

Other (order in electronic medical record drug file)

New for 2016, we asked payers if they were planning to increase the use and collection of Na-tional Drug Code (NDC) data over the next 12 to 18 months for medical benefit drugs. Close to two-thirds (64 percent) planned to capture NDC data and more than one-quarter (28 percent) planned to report utilization data (see figure 105).

In 2016, 57 percent of payers also had providers collecting and sharing quality and out-comes data from their medical records (see figure 106). For those whose providers were collecting and sharing this data, 29 percent were able to implement changes based on the outcomes data they were given (see figure 107).

NDC Data Collection in the Next 12-18 Months

Yes

No

Don’t Know

Yes

No

Don’t Know

57+24+1829+57+1464+20+28+20FIGURE 105

Network Provider Sharing of Quality and Outcomes Data

FIGURE 106

FIGURE 107

Network Provider Changes Based on Outcomes Data

Health Information Data (n=25; 45 million lives)

(% of payers)



64%

20%

20%

28%

24%

29%

18%

14%

57%

57%

(% of payers)

(% of payers)


57+24+1829+57+1464+20+28+20 (% of payers)


For your convenience, a downloadable PDF version of this

2016 Magellan Rx Medical Pharmacy Trend Report as well

as previous reports and other Magellan Rx publications are

available at magellanrx.com.

Medica l Benef i t Drug P ipe l ine

Medical Benefit Drug PipelineFIGURE 108

In 2016, 13 new medical pharmacy drugs were approved, including four oncology/oncology support agents and three agents for the treatment of hemophil-ia, most of which allowed for a decreased number and frequency of infusions. Pediatric and rare diseases are another area which is evolving. Exondys 51 was the first agent approved to treat Duchenne muscular dystrophy, and Spinraza was the first approved drug for Spinal Muscular Atrophy (SMA). In 2016, Inflectra was the first monoclonal antibody(mAb) and infused biosimilar to be approved by the FDA for the treat-ment of autoimmune diseases (see figure 108).

BRAND NAME

GENERIC NAME APPROVAL DATE

ROUTE OF ADMINISTRATION

INDICATION DISEASE STATE PREVALENCE

ESTIMATED COST (AWP) COMMENT

Idelvion albutrepenonacog alfa

3/4/2016 IV Infusion Hemophilia B Estimated 5,000 cases in the U.S.

Variable by weight; approximately $450,000 to $500,000 annually

Orphan drug designation. Long acting recombinant Factor IX.

Evomela melphalan 3/10/2016 IV Infusion Multiple Myeloma (MM) in patients who cannot tolerate oral therapy

Estimated 30,330 new cases of MM were forecasted to be diagnosed (17,900 in men and 12,430 in women) in 2016.

Estimated $15,500 annually Orphan drug designation for its use as a high-dose conditioning regimen for MM patients undergoing autologous stem cell transplantation. This is the first approved new formulation of melphalan since its initial approval in 1964.

Kovaltry octocog alfa 3/17/2016 IV Infusion Hemophilia A Estimated 15,000 cases in the U.S.

Variable by weight and dosage; annual cost range for adult dosage is $185,000 to $555,000.

Also sold as Iblias in some markets. Offers twice to three-times weekly dosing.

Cinqair reslizumab 3/23/2016 IV Infusion Add-on maintenance treatment of patients with severe asthma in adults 18 and older and with eosinophilic phenotype

22.6 million Americans with asthma. 20% comprises severe cases and up to half of the severe cases are eosinophilic subtypes.

Estimated $28,860 annually Humanized interleukin-5 antagonist monoclonal antibody.

Defitelio defibrotide sodium 3/30/2016 IV Infusion Hepatic veno-occlusive disease (VOD) with renal or pulmonary dysfunction following hematopoietic stem cell transplantation (HSCT)

Mean prevalence of hepatic VOD after HSCT estimated at 14% (rates ranging from 5% to 60%)

Estimated cost for 21 days of therapy is $208,000; max of 60 days estimated cost is $594,000.

Potentially curative treatment. Previously no approved options for hepatic VOD.

Inflectra infliximab-dyyb (Remicade biosimilar Hospira)

4/5/2016 IV Infusion Crohn’s disease, ulcerative colitis, RA, ankylosing spondylitis, PsA, plaque psoriasis

Varies Approximately $35,000 to $50,000 annually

First monoclonal antibody biosimilar approved; second biosimilar approved in the U.S. Not approved as interchangeable product. Boxed warning regarding risk of serious infections and malignancy.

Tecentriq atezolizumab 5/18/2016 IV Infusion Locally advanced or metastatic urothelial carcinoma (bladder cancer). Additional approval 10/16 for metastatic NSCLC.

There are over 580,000 Americans with bladder cancer in the U.S., with 77,000 new cases estimated in 2016. Urothelial carcinoma accounts for 90% of all bladder cancers.

Approximately $150,000 annually Granted breakthrough therapy designation, priority review, and accelerated approval. First and only PD-L1 inhibitor approved. Also subsequently approved for metastatic NSCLC.

Afstyla antihemophilic Factor VIII (recombinant) single chain, or rVIII – single chain

5/26/2016 IV Infusion Hemophilia A Estimated 15,000 cases in the U.S.

Variable by patient weight. Approximately $330,000 to $1.2 million annually

First single-chain product for hemophilia A specifically designed for extended dosing (two to three times weekly).

Sustol granisetron 8/10/2016 SQ Injection Chemotherapy-induced nausea/vomiting

Occurs in up to 80% of chemotherapy patients

Approximately $600 per 10 mg syringe

First extended release 5-HT3 antagonist, maintaining therapeutic levels for ≥5 days. Health-provider administered.

Cuvitru immune globulin SQ (human) 20% solution

9/14/2016 SQ Infusion Primary immunodeficiency Estimated 38.9 to 50.5 per 100,000 in the U.S.; 6 million worldwide

Approximately $77,500 to $155,000 annually

SQ infusion only. Approved in adults and children ≥2 yo. Formulation allows for fewer infusion sites and shorter infusion durations compared to conventional SQ IG treatments.

Exondys 51

eteplirsen 9/19/2016 IV Infusion Duchenne muscular dystrophy (DMD) with confirmed mutation of dystrophin gene amenable to exon 51 skipping

Affects 1 out of 3,600 male infants worldwide; approx. 2,000 patients in US

Approximately $300,000 annually

Priority review and fast track/orphan designations. Clinical benefit has not been established, and continued approval is contingent upon verification of clinical benefit in further trials.

Lartruvo olaratumab 10/19/2016 IV Infusion Soft tissue sarcoma (STS) Estimated 12,310 new cases of STS in 2016

Approximately $109,000 per six months

Accelerated approval, orphan drug designation, fast track designation, breakthrough therapy designation, and priority review. Phase III confirmatory study in progress.

Spinraza nusinersen 12/23/16 IV Infusion Spinal Muscular Atrophy (SMA) Affects 1 in 10,000 live births in the U.S. Approximately 9,000 patients in the U.S.

Approximately $750,000 for year one and $375,000 for subsequent years of therapy

SMA is the leading heritable cause of infant mortality. First drug approved to treat children and adults with SMA. Fast track designation, priority review, and orphan drug designation.

Medical Benefit Drugs Approved in 2016

2016 Drug Approvals

List above may not be inclusive of all new medical specialty drug approvals in 2016; based on varying specialty definitions and date of update.


A large portion of the new therapies in the medical pharmacy pipeline are agents with unique mechanisms of action to treat can-cer. Immunotherapies, including the checkpoint inhibitors of the pro-grammed cell death protein 1 (PD1) and programmed death-ligand 1 (PD-L1) inhibitors, continued to be approved and approved for ex-panded indications. In 2016, they were approved for six additional indications beyond their original FDA approvals. These agents are being studied individually and in numerous different combinations with each other and other chemotherapies to treat a variety of cancers including multiple myeloma, breast, pancreatic, ovarian, hepatocellular carcinoma, non-small cell lung cancer, renal cell car-cinoma, lymphoma, bladder cancer, and head and neck cancer.

On the horizon, moving into 2018 and beyond, the adoptive cell transfer (ACT) therapies are thought to be revolutionary. The majority of these agents are currently in Phase I trials and research is continu-ing. Utilizing chimeric antigen receptor (CAR) T cell therapies that can target the CD19 antigen could become the standard of care for many lymphomas and leukemias including acute lymphoblastic leukemia (ALL) and chronic lymphocytic leukemia (CLL). Treatments

using these engineered immune cells have generated preliminary responses in patients with advanced cancers and have proven to be an area to watch for rapid advancement.

The category of autoimmune disorders saw the first approval of a biosimilar to Remicade with Inflectra in 2016, although it experi-enced a delay in market launch of several months. There is anoth-er biosimilar to Remicade in the pipeline for 2017. There are also several other biosimilar hematologic agents expected for approval in 2017 with biosimilars for Neupogen, Neulasta, and Epogen/Procrit.

There are several orphan agents in the pipeline for pediatric and rare disease states that have been identified as breakthrough ther-apies and received fast track designation by the FDA. This allows for expedited development and review of these agents due to the serious conditions they treat and to fill an unmet medical need (see figure 109).

FIGURE 109

Medical Benefit Pipeline

Medical Benefit Pipeline

THERAPEUTIC CATEGORY

DRUG MECHANISM OF ACTION

INDICATION ROUTE OF ADMINISTRATION

DISEASE STATE PREVALENCE

EXPECTED APPROVAL

ADDITIONAL COMMENTS

Alzheimer’s Disease solanezumab Amyloid beta protein inhibitor

Alzheimer’s Disease IV infusion 5.4 million Americans 2018 Did not meet its desired end point from EXPEDITION-3

Autoimmune Disorders

infliximab TNF-alpha inhibitor RA, Crohn’s, UC, ankylosing spondylitis, PsA, plaque psoriasis

IV infusion Varies by disease state 4Q 2017 Second biosimilar to Remicade (Samsung Bioepis with Merck)

Hematological N9-GP nonacog beta pegol

Coagulation Factor IX (Recombinant)

Hemophilia B IV infusion Estimated 5,000 cases in the U.S. 5/16/2017 Long-acting Factor IX

Hematological epoetin alfa (Retacrit) Erythropoiesis-stimulating agent (ESA)

Treatment of anemia IV infusion/SQ injection

Varies with cause 2H 2017 Biosimilar to Epogen/Procrit (Pfizer)

Hematological pegfilgrastim Granulocyte colony-stimulating factor

Treatment of neutropenia SQ injection Varies with cause 2017 Biosimilar to Neulasta (Apotex)

Hematological filgrastim (Grastofil) Granulocyte colony-stimulating factor

Treatment of neutropenia SQ injection Varies with cause 2017 Biosimilar to Neupogen (Apotex)

Hematological pegfilgrastim Granulocyte colony-stimulating factor

Treatment of neutropenia SQ injection Varies with cause June 2017 Second biosimilar to Neulasta (Coherus)

HIV Remune HIV vaccine Human Immunodeficiency Virus (HIV)-1

Intramuscular injection

Estimated 1.2 million cases in the U.S.

2017 First-in-class rescue vaccine

Immune Globulin Intravenous immune globulin (RI-002)

Immunoglobulin Primary immunodeficiency (PI)

IV infusion Estimated 38.9 to 50.5 per 100,000 in the U.S.; six million worldwide

Delayed ADMA Biologics’ specialty plasma-derived IVIG. Contains polyclonal antibodies and RSV antibodies.

Multiple Sclerosis ocrelizumab (Ocrevus) CD20 antibody Primary progressive and relapsing multiple sclerosis

IV infusion Approximately 400,000 Americans with MS; relapsing MS is the most common form of MS – 85% of cases. Primary progressive MS is diagnosed in 10% of MS patients at onset.

3/28/2017 Fast track and breakthrough therapy designations

Oncology axalimogene filolisbac, or AXAL

Immunotherapy Cervical cancer Intramuscular injection

7.5 new cases per 100,000 women per year. Estimated 248,920 women with cervical cancer in 2013.

TBD Orphan drug designation for invasive cervical cancer, head and neck cancer, and anal cancer – all in Phase III. Fast track designation for cervical cancer. Listeria monocytogenes vaccine used to elicit immune response against cancer.


Medica l Benef i t Drug P ipe l ine

THERAPEUTIC CATEGORY

DRUG MECHANISM OF ACTION

INDICATION ROUTE OF ADMINISTRATION

DISEASE STATE PREVALENCE

EXPECTED APPROVAL

ADDITIONAL COMMENTS

Oncology lutetium Lu 177 dotate (Lutathera)

Lu-177-labeled somatostatin analogue peptide

Gastroenteropancreatic neuroendocrine tumors (GEP-NETs)

IV infusion Incidence of 3.65 per 100,000 individuals per year

Delayed Part of emerging form of treatments called peptide receptor radionuclide therapy (PRRT). Orphan drug and fast track designations.

Oncology durvalumab Programmed death ligand-1(PD-L1) inhibitor

Squamous cell carcinoma of the head and neck (SCCHN)

IV infusion Estimated 62,000 individuals will develop head and neck cancer each year.

TBD Fast track designation for SCCHN. In Phase III trials for NSCLC with expected filing in 2017. Also in trials for gastric, pancreatic, and bladder cancers and in multiple combinations.

Oncology inotuzumab ozogamicin Anti-cluster of differentiation 22 (CD22) antibody

Acute lymphocytic leukemia (ALL)

IV infusion 1.7 new cases per 100,000 individuals annually. Estimated 78,000 Americans with ALL in the U.S. in 2013.

TBD Breakthrough therapy designation

Oncology TT10 EB-VST Immunomodulator Nasopharyngeal cancer IV infusion Less than one case per 100,000 each year. In 2015, estimated new 3,200 cases in the U.S.

TBD Orphan/fast track designation. Virus-driven cancer T-cell therapy –Epstein-Barr virus specific T cells

Oncology copanlisib Phosphoinositide 3-kinase (PI3K) inhibitor

Non-Hodgkin lymphoma (NHL)

IV infusion 19.5 per 100,000 individuals annually. Estimated 570,000 people with NHL in the U.S. in 2013.

TBD Orphan drug designation for follicular lymphoma, a histologic subtype of NHL

Oncology avelumab Programmed death ligand-1(PD-L1) inhibitor

Non-small cell lung cancer (NSCLC)

IV infusion Over 188,000 NSCLC patients diagnosed each year

TBD In Phase III trials for NSCLC, renal cell carcinoma, and gastric, bladder, and ovarian cancers. Breakthrough therapy designation for metastatic Merkel cell carcinoma (MCC), currently in Phase II.

Oncology imetelstat Telomerase inhibitor

Myelodysplastic Syndrome (MDS)

IV infusion Incidence of 3-4 cases per 100,000 per year; 30 cases per 100,000 per year in pts > 70. Estimated 10-15K new cases diagnosed annually in the U.S.

TBD Orphan drug designation

Oncology aldoxorubicin Albumin-binding cytotoxic agent

Soft tissue sarcoma IV infusion Estimated 12,310 new cases will be diagnosed in 2016.

TBD Phase III trial conducted under a special protocol assessment (SPA)

Oncology volasertib Polo-like kinase-1 (Plk1) inhibitor

Acute myeloid leukemia (AML)

IV infusion/Oral Estimated 19,950 new cases of AML in the U.S. in 2016.

TBD Orphan/breakthrough therapy designation. Currently in phase III clinical trials for previously untreated AML ineligible for intensive remission induction therapy.

Oncology rilimogene galvacirepvec

Immunotherapy Prostate cancer SQ injection 129.4 per 100,000 men annually. Estimated 2.8M men with prostate cancer in the U.S. in 2013.

TBD Fast track designation

Oncology eltrapuldencel-T Autologous dendritic cell therapy

Melanoma SQ injection 21.8 new cases per 100,000 individuals per year. Estimated 1.03 million people with melanoma in the U.S.

TBD Fast track and orphan drug designations

Oncology aglatimagene besadenovec (ProstAtak)

Immunomodulator Prostate cancer Trans-rectal ultrasound-guided injection

129.4 per 100,000 men annually. Estimated 2.8 million men with prostate cancer in the U.S. in 2013.

TBD In Phase III trial with valacyclovir for newly diagnosed prostate cancer. Orphan drug designation. Trial conducted under a special protocol assessment (SPA) agreement with the FDA.

Rare Diseases cerliponase alfa (Brineura)

Enzyme replacement therapy

Late-infantile neuronal ceroid lipofuscinosis (CLN2) disease, a form of Batten Disease

Intracerebro-ventricular injection

Affects two to four of every 100,000 live births in the U.S.

4/27/2017 Priority review, orphan drug designation, and breakthrough therapy designation

Rare Diseases edaravone (Radicava) Neuroprotective agent

Amyotrophic Lateral Sclerosis (ALS)

IV infusion Estimated 3.9 cases per 100,000 people in the U.S.

6/16/2017 Orphan drug designation

Viscosupplementation sodium hyaluronate; triamcinolone hexacetonide (Cingal)

Hyaluronic acid; corticosteroid

Osteoarthritis of the knee Intra-articular injection

An estimated 30.8 million adults had osteoarthritis from 2008 to 2011; symptomatic knee OA occurs in 10 percent of men and 13 percent of women aged 60 years or older.

TBD This proprietary cross-linked sodium hyaluronate is currently marketed by the same manufacturer, Anika, as Monovisc. Cingal is approved as a medical device in Canada and was recently approved in Europe.

FIGURE 109, CONTINUED

Medical Benefit Pipeline, cont.


Innovation continues to advance treatment each year as we consistently see new specialty therapies approved by the FDA aimed at treating complex diseases. Consequently, this has con-tributed to the increasing specialty spend for payers and height-ened the importance of understanding the future financial impact and how to manage utilization. These large-molecule therapies, such as monoclonal antibody drugs, are commonly reimbursed on the medical benefit. One such example is the antineoplastic im-munotherapy class, which has had several recent market entrants and FDA label expansions (see figure 110). There are more of these medications in the pipeline and further potential label expansions, which could increase their utilization and spend significantly. The estimated national 2015 PMPM for anti neoplastic immunothera-pies could increase six-fold by 2020.

Beyond antineoplastic immunotherapies, other medical benefit drugs are expected to have an increased impact on payers go-ing forward, with the amount of billion-dollar medical pharmacy drugs increasing from 18 to 28 by 2020 (see figure 111). As this list continues to expand, payers will need to expand their focus beyond only a handful of top-spend medical drugs and find solu-tions to evolve their medical drug management practices across many different therapeutic categories including autoimmune con-ditions, oncology, immune globulin, multiple sclerosis, asthma, migraine, etc. With a growing pipeline and the introduction of biosimilars into the U.S. market, medical pharmacy is more com-plex than ever and will continue to be increasingly significant in the management of overall drug spend.

Specialty Pipeline Forecasting

FIGURE 110 FIGURE 111

Number of Billion Dollar Drugs 2015-2020

Oncology Immunotherapy Drugs Forecast by PMPM*

2015

18

2016

23

2017

26

2019

27

2018

26

28

2020

18DRUGSIN 2015

28DRUGSIN 2020

BILLION DOLLAR DRUGS

$0.52$1.18

$1.64$1.94

$2.24 $2.47

$0.82$0.57

$0.33$0.10

$0.03

2016 2018 20202015 2017 2019 2016 2018 20202015 2017 2019

$1.21$0.52

$1.74$2.27

$2.81$3.29

Drugs Currently on Market Pipeline Drugs

*Analysis for current drugs on the market included Opdivo (nivolumab), Keytruda (pembrolizumab), and CTLA-4 inhibitor Yervoy (ipilimumab). Tecentriq (atezolizumab) was approved starting in 2016 and therefore included in the market starting with that date. Pipeline drugs include: durvalumab, avelumab, and tremelimumab. All are expected to be approved in 2017 or 2018. The figures represent predictive values and have been provided for information and educational purposes only.

Source: EvaluateLTD. EvaluatePharma®. Accessed: November 2016 http://www.evaluategroup.com/public/EvaluatePharma-Overview.aspx

Totals


Leg i s la t i ve Re imbursement Po l i cy Updates

Federal and state elected leaders and regulators have focused more intensely on healthcare reform in recent years, rais-ing questions of cost, coverage, access, and quality increasing-ly to the forefront of the national dialogue. The Affordable Care Act (ACA) of 2010 focused on three main areas: insurance re-forms and consumer protections, coverage expansion and im-provement, and cost containment and payment reform, including shifting reimbursement methodologies from paying for volume to paying for value. The inauguration of President Donald Trump on January 20, 2017, introduced a new administration with different priorities and perspectives on healthcare, including the potential for repealing and replacing the ACA. National debate contin-ues on the high prices charged for prescription drugs and bio-logics1, and there remains significant interest in payment reform, reforming the Medicare and Medicaid programs, and exploring models of innovation—especially at the state level. In the context of these environmental changes, potential for new policy recom-mendations and regulatory changes is high as the new adminis-tration, the 115th Congress, and state executives begin new dia-logue to address these questions.

The New AdministrationThe new administration entered the White House on a plat-

form of repealing and replacing the ACA. The administration has proposed a number of healthcare-reform options to replace the law’s components, including:• The purchase of health insurance (favoring high-deductible

health plans and tax-free health savings accounts (HSAs)) outside the exchanges

• Turning Medicaid into a state block grant program• Deductibility of premium costs from personal income tax

returns• Reforming mental health programs and institutions• The sale of insurance policies across state lines to boost

competition• Making HSAs inheritable

Beyond these replacement proposals, it has been suggested2 that executive and congressional action on drug prices may be a larger and more immediate priority: An October Kaiser Family Foundation survey showed 74 percent3 of respondents stated that making drugs for chronic conditions affordable should be a top healthcare priority, while 64 percent4 of those surveyed

Legislative Trends

1. Ashley Kirzinger, Elise Sugarman, and Mollyann Brodie, Kaiser Family Foundation, “Kaiser Health Tracking Poll: October 2016” (Oct. 27, 2016), http://www.kff.org/health-costs/poll-finding/kaiser-health-tracking-poll-october-2016.

2. Reuters, “U.S. Consumers Will Want Trump, Congress to Take on Drug Prices” (Nov. 11, 2016), http://www.reuters.com/article/us-usa-election-pharmaceuticals-analysis-idUSKBN13622E.

3. Ibid., Kaiser Family Foundation (Oct. 27, 2016).4. POLITICO and the Harvard T.H. Chan School of Public Health, “The 2016 Election: Clinton vs. Trump Voters on American Health Care”

(October 2016), http://www.politico.com/f/?id= 00000158-039b-d881-adda-77db04b70000.5. Senators Tammy Baldwin and John McCain, 114th Congress, second session, “Fair Accountability and Innovative Research Drug Pricing Act

of 2016,” http://www.baldwin.senate.gov/imo/media/doc/Text%20-%20FAIR%20Drug%20Pricing%20Act.pdf.

6. Reflects HealthCare.gov states and states with state-based marketplaces, where data were made available. See Office of the Assistant Secretary for Planning and Evaluation (ASPE), HHS, “Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace,” ASPE Research Brief (Oct. 24, 2016), table 10, “Number of Marketplace Issuers by State, 2016-2017 in HealthCare.gov States & State-Based Marketplaces for Which Data Are Available” (page 27), http://aspe.hhs.gov/sites/default/files/pdf/212721/2017MarketplaceLandscapeBrief.pdf.

7. Ibid., ASPE (Oct. 24, 2016), page 12.8. Ibid., ASPE, page 13. 9. Peter Sullivan, The Hill, “Frustration Mounts Over ObamaCare Co-Op Failures” (Aug. 1, 2016), http://thehill.com/policy/

healthcare/289847-frustration-mounts-over-obamacare-co-op-failures.

believed the federal government should have the authority to lim-it pharmaceutical companies’ ability to raise the price of prescrip-tion drugs. The new administration suggested allowing Medicare to negotiate prices, making it easier for consumers to import prescription drugs from other developed countries where they sell for less, and providing extra funding to the U.S. Food and Drug Administration (FDA) to speed approval of generic drugs. Conservative health policy proposals — including the proposed Fair Accountability and Innovative Research (FAIR) Drug Pricing Act of 20165 (McCain-R, Arizona, and Baldwin-D, Wisconsin), which would require manufacturers to explain annual price in-creases of more than 10 percent, and more disclosure of pricing details and pricing drugs based on their relative health benefit — will be under review by the new administration.

Health Insurance Marketplace in 2017

As marketplace enrollees began to shop for coverage in November 2016, the number of insurance choices available to them changed in many parts of the country. After remaining rela-tively stable between the 2015 and 2016 plan years, and see-ing gains from 2014 to 2015, the number of issuers dropped sig-nificantly heading into the 2017 plan year: 228 issuers in 2017 as compared to 298 in 2016.6 In late 2015, approximately nine out of 10 (87 percent) consumers lived in counties with three or more insurers; for 2016, this proportion fell to 56 percent.7 Throughout 2016, insurers announced reduced participation or multi-state withdrawals from the marketplace, most notably the withdrawal of UnitedHealth and Aetna, which accounted for 43 of the total 83 issuer exits.8 A majority of the original 23 nonprof-it consumer operated and oriented plans (CO-OPs) have shut-tered, including those in Connecticut, Illinois, Ohio, and Oregon; only seven are anticipated for plan year 2017.9

The third open enrollment under the ACA enrolled 11.1 mil-lion people (i.e., whom had signed up, paid their premiums, and held an active purchased policy) through the exchanges, with 2016 year-end effectuated enrollment at approximately 10 million10 ; this initial post-enrollment period figure for 2016 was up from 10.2 million in 201511 and more than eight mil-lion in 2014.12 For 2017, open enrollment ended with more than 9.2 million plan selections in states using HealthCare.gov for el-igibility and enrollment, including approximately 3 million new


10. CMS, “March 31, 2016 Effectuated Enrollment Snapshot” (June 30, 2016), http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-06-30.html.

11. CMS, “March 31, 2015 Effectuated Enrollment Snapshot” (June 2, 2015), http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-06-02.html.

12. ASPE, HHS, “Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period,” ASPE Issue Brief (May 1, 2014), http://aspe.hhs.gov/sites/default/files/pdf/76876/ib_2014Apr_enrollment.pdf.

13. CMS, “Biweekly Enrollment Snapshot: Weeks 10 and 11, Jan. 1-Jan. 14, 2017” (Jan. 18, 2017), http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-01-18.html.

14. Congressional Budget Office, “Federal Subsidies for Health Insurance Coverage for People Under Age 65: Tables From CBO’s March 2016 Baseline” (March 2016, table 1, “Health Insurance Coverage for People Under Age 65,” https://www.cbo.gov/sites/default/files/51298-2016-03-HealthInsurance.pdf.

15. CMS, “Proposed rule: Medicare Program; Part B Drug Payment Model,” Federal Register 81 (March 11, 2016): 13229-13261, agency/

docket no. CMS-1670-P (RIN 0938-AS85), https://www.gpo.gov/fdsys/pkg/FR-2016-03-11/pdf/2016-05459.pdf.16. Medicare Payment Advisory Commission, “Report to the Congress: Medicare and the Health Care Delivery System” (June 2015), http://

www.medpac.gov/docs/default-source/reports/june-2015-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf.17. Shannon Muchmore, “CMS Defends Medicare Part B Proposal,” Modern Healthcare (June 28, 2016), http://www.modernhealthcare.com/

article/20160628/NEWS/160629905.18. Representatives Tom Price, John Shimkis, Charles Boustany Jr., Kevin Brady, et al., U.S. House of Representatives, “Letter to The Honorable

Andy Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services” (May 2, 2016), http://tomprice.house.gov/sites/tomprice.house.gov/files/assets/Medicare%20Part%20B%20Demo%20Letter%5b4%5d.pdf.

19. For example, American Cancer Society, Cancer Action Network, “Letter to the Honorable Sylvia Burwell re: CMS-1670-P – Medicare Program; Part B Drug Payment Model; Proposed Rule, 81 Fed. Reg. 13230 (March 11, 2016)” (May 9, 2016), http://docs.house.gov/meetings/IF/IF14/20160517/104931/HHRG-114-IF14-20160517-SD005.pdf.

20. For example, Community Oncology Alliance, “Letter to Mr. Andy Slavitt re: Medicare Program; Part B Drug Payment Model [CMS-1670-P],”

marketplace consumers and 6.2 million returning.13 While these are in line with Health and Human Services (HHS) targets, it is short of earlier projections by the Congressional Budget Office (CBO), which continues to serve as an implicit yardstick for the ACA. In March 2016, CBO projected marketplace enrollment of 15 million for 2017, down from 21 and 13 million in earlier forecasts.14

Physician Payment and Payment Reform Updates WITHDRAWN MEDICARE PART B PAYMENT REFORM DEMONSTRATION

In March 2016, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule to test a new mod-el for how Medicare Part B pays for physician-administered pre-scription drugs15. Similar to an approach advanced by the in-dependent Medicare Payment Advisory Commission (MedPAC) in its June 2015 report to Congress, Phase 1 of the new model would test whether changing today’s ASP of a drug plus six per-cent add-on to 2.5 percent plus a flat fee payment of $16.80 per drug per day would change prescribing incentives (i.e., elim-inating financial incentives for providers to prescribe more expen-sive drugs). 16 The new model was slated to begin in late 2016 with Phase 2 beginning in winter 2017. In response to signifi-cant public comment17, opposition from congressional lawmak-ers on both sides of the aisle18, physicians and physician spe-cialty societies19, and patient advocacy groups20, the proposed demonstration was withdrawn in December 2016. It remains to be seen whether CMS, which was working under “limited time” to address stakeholders concerns, will revisit the the model in fu-ture rule-making21.

ONCOLOGY CARE MODEL UPDATEThe Oncology Care Model (OCM) is one of the first physi-

cian-led specialty care models and builds on lessons learned from other CMS Innovation Center programs and private-sec-tor models. Through the new, five-year OCM, physician prac-tices may receive performance-based payments for episodes of care surrounding chemotherapy administration to Medicare pa-tients with cancer, as well as a monthly care management pay-ment for each beneficiary. The two-sided risk track of this mod-el will be an advanced alternative payment model (APM) under the newly final Quality Payment Program (QPP).

In late June 2016, HHS announced the selection of approxi-mately 200 physician group practices and 17 health insurance companies to participate in the OCM. Aiming to support and

encourage higher quality and more coordinated cancer care, the Medicare arm of the OCM includes more than 3,200 oncol-ogists and will cover approximately 155,000 Medicare bene-ficiaries nationwide.22 The OCM began July 1, 2016, and runs through June 30, 2021.

PATIENT-CENTERED ONCOLOGY CARE MODELThe American Society of Clinical Oncology (ASCO) has de-

veloped a payment reform mod-el designed to improve the qual-ity and affordability of care for patients with cancer. The ASCO model will allow oncology prac-tices to successfully navigate the transforming healthcare environ-ment and transition to alterna-tive payment models. Based on extensive feedback from ASCO members, other stakeholders across the oncology communi-ty, and policymakers, ASCO has developed a significantly en-hanced proposal called Patient-Centered Oncology Payment: Payment Reform to Support Higher Quality, More Affordable Cancer Care (PCOP). PCOP was developed by an ASCO volunteer work group of leading medical oncologists, seasoned practice administrators, and ex-perts in physician payment and business analysis. The basic PCOP system was designed to provide supplemental, non-vis-it-based payments to oncolo-gy practices to support diagno-sis, treatment planning, and care management. Oncology practic-es would be able to bill payers for four new service codes: 1) New patient treatment planning: $750 payment for each new patient; 2) Care management during treatment: $200 payment each month for each patient

of respondents said making drugs for chronic conditions affordable should be a top

healthcare priority

of respondents believe the federal government should have the

authority to limit pharmaceutical companies’ ability to raise the

price of prescription drugs

Approximately nine out of 10 (87 percent of)

consumers lived in counties with three or more insurers

74+26+U64+36+U87+13+U87%

74%

64%


Leg i s la t i ve Re imbursement Po l i cy Updates

(May 9, 2016), http://www.communityoncology.org/pdfs/COA_CMS_PartBModelLetter_5-9-16_FINAL.pdf. 21. Tom Howell Jr., “Obama Admin. Drops Contentious Medicare Part B Proposal,” The Washington Times (Dec. 16, 2016), http://www.

washingtontimes.com/news/2016/dec/16/obama-admin-drops-contentious-medicare-part-b-prop/.22. HHS, “HHS Announces Physician Groups Selected for an Initiative Promoting Better Cancer Care” (June 29, 2016), http://www.hhs.gov/

about/news/2016/06/29/hhs-announces-physician-groups-selected-initiative-promoting-better-cancer-care.html. 23. CMS, “Part B Biosimilar Biological Product Payment and Required Modifiers,” (November 22, 2016), http://www.cms.gov/Medicare/

Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/Part-B-Biosimilar-Biological-Product-Payment.html24. Esther Scherb and Kassie Maldonado, Covington & Burling LLP, https://www.cov.com/-/media/files/corporate/

publications/2016/04/10_things_to_know_about_us_biosimilar_reimbursement.pdf.25. Molly Burich, “Potential Unintended Consequences of CMS’ Policy for Biosimilars Reimbursement” (June 6, 2016), http://www.

biosimilardevelopment.com/doc/potential-unintended-consequences-of-cms-policy-for-biosimilars-reimbursement-0001.26. Public Health Service Act, Pub. L. 78-410, 58 Stat. 682/42 U.S.C. Sec. 256b.

3) Care management during active monitoring: $50 payment each month for each patient during treatment holidays and for up to six months following the end of treatment; 4) Participation in clinical trials: $100 per month payment for each patient while treatment is underway and for six months afterward.

Biosimilars Payment Policy UpdateBiosimilars are biological products approved on the basis of

comparability to a biologic previously approved by the U.S. FDA. Biologics and biosimilars consist of large, complex mol-ecules manufactured in living cells and then extracted and puri-fied. Because these products are produced in living cells (unlike generics), biosimilars are highly similar – but not identical – to their reference product; they also may not serve the full set of clinical indications as the original brand-name biologic product. Due to these differentiating factors, the regulatory pathway for bi-osimilars is different from that for generic drugs.

In the 2016 Medicare Physician Fee Schedule Final Rule, ef-fective January 1, 2016, CMS updated the payment rule for bi-osimilars to clarify that the payment amount for a biosimilar is based on the ASP of all national drug codes assigned to the bi-osimilar biological products included within the same billing and payment code (or J code). In general, CMS will group biosimilar products to the same reference product into the same payment calculation; and these products will share a common payment limit and healthcare common procedure coding system (HCPCS) code.23

Under the Medicare Prescription Drug Program (Part D), bi-osimilars may be added to a plan formulary at any time as a formulary enhancement but are not considered interchange-able with the reference product. Biosimilars are not subject to the Medicare Coverage Gap Discount Program; because they are not generics, biosimilars are subject to higher maximum copay-ments for individuals eligible for low-income subsidies or who have entered catastrophic coverage. Separately, CMS restat-ed its March 2015 guidance on the classification of biosimi-lars under the Medicaid program, confirming biosimilars are “single source drugs” and subject to higher rebates under the Medicaid Drug Rebate Program, already the highest rebates in healthcare.24

Despite biosimilars being single-source drugs and differing in other ways from generics, the Final Rule follows the reimburse-ment model of multi-source generic drugs; as a result, CMSs grouping of biosimilars that do not share clinical indications may result in confusion for providers or pose administrative challeng-es within medical practices. Such potential for confusion may ex-tend beyond the clinical setting to patients’ claim coding and payment, and may create an opportunity for future rule-making to encourage biosimilar development and uptake.25

340BOVERVIEW OF THE 340B PROGRAM

Congress established the 340B Drug Pricing Program in 1992, which requires manufacturers to provide substantial discounts on outpatient drugs as a condition of receiving Medicaid and Medicare Part B payments.26 Eligible providers (“340B-covered entities,” or CEs) include hospitals, community health centers, and HIV/AIDS, diabetes, cancer, dental, and primary care clin-ics serving the underserved and/or providing uncompensated or undercompensated care. In addition, drugs purchased by 340B-covered entities at a discount can be sold to all individu-als who meet the program’s definition of a “patient” regardless of their insurance status.

Since 1992, the program has largely been implemented through guidance instead of formal rule-making and regulation like most federal statutory programs. In 2014, the D.C. Circuit Court held that the Health Resources and Services Administration (HRSA) does not have rule-making authority for the 340B pro-gram outside of civil monetary penalties, dispute resolution, and ceiling prices.27 Due to this ruling, HRSA converted its omnibus regulation — intended to establish uniform clear and enforce-able policies — into proposed guidance28 because it lacks ex-plicit rulemaking authority.

2016 REGULATORY LOOK BACKThe 340B program remains an area of focus for federal poli-

cymakers, and federal-level activity and publications from 2016 indicate it would have been a year of new guidance for the pro-gram. Below is a breakdown of recent regulatory initiatives re-lated to 340B.• Through release of its May 2015 regulatory agenda,

the HRSA stated it would delay the final 340B program Omnibus Guidance until the end of 2016.29 The August 2015 proposed version of this guidance received more than 800 comments, many of which raised legal and operation-al concerns the agency is expected to address in the final guidance. The Office of Management and Budget (OMB) received the agency’s wide-ranging “mega-guidance” September 1, 2016, which had been scheduled to be pub-lished in December 2016.30 It now appears unlikely the omnibus guidance will be published as sent to the OMB; the new administration has directed heads of federal agen-cies to conduct a full review of items unpublished, pending publication, and recently published (i.e., on or around the

The 340B program remains an area of focus for federal policymakers.


inauguration date of January 20) in the Federal Register, which may include the OMB-pending omnibus guidance.31

• Originally scheduled to be issued in 2015, the agency pub-lished a Notice of Proposed Rulemaking on the 340B pro-gram’s administrative dispute resolution process in August 2016.32 The proposed rule reflects an ACA requirement to implement an enhancement to the 340B program by estab-lishing a binding administrative dispute resolution (ADR) pro-cess to resolve certain disputes between CEs and manufac-turers arising under the program.

• Also required by the ACA, a final rule imposing monetary sanctions (not to exceed $5,000 per instance) on drug man-ufacturers “who intentionally charge a CE a price above the ceiling price established under the” program, plus standards and methodology for the calculation of ceiling prices, was published in the Federal Register January 5, 2017 following a delay from the May 2016 release estimate.33

Separate from HRSA’s regulatory agenda, CMS issued two regulations in 2016 affecting the 340B program:• The Medicaid Managed Care Final Rule34, which requires

Medicaid managed care organizations (Medicaid plans) to exclude utilization data for drugs subject to discounts un-der the 340B program so manufacturers will not be subject to a duplicate discount. State Medicaid agencies must im-plement this and other requirements in their managed care programs with Medicaid plan contracts beginning on or af-ter July 1, 2017.

• The proposed rule updating the Medicare outpatient pro-spective payment schedule implements Sec. 603 of the Bipartisan Budget Act of 2015’s site neutrality requirements, which change the way certain off-campus hospital outpa-tient departments will be paid.35

In addition, a pair of independent agencies also reviewed the 340B program in 2016: the HHS Office of the Inspector General (OIG) and MedPAC. For its part, the OIG addressed the aforementioned issue of Medicaid managed care rebates and 340B drugs in a June 2016 report.36 In the report, the OIG concluded that many states use methods (i.e., often at the pro-vider level or using the HRSA Medicaid Exclusion File) that may inaccurately identify 340B drug claims when calculating manu-facturer rebates for drugs paid through Medicaid plans. While fewer states use claim-level methods, this level of methodology

27. Pharmaceutical Research and Manufacturers of America (PhRMA) v. HHS, 43 F. Supp. 3d 28 (D.D.C. 2014).28. HRSA, HHS, “Notice: 340B Drug Pricing Program Omnibus Guidance,” Federal Register 80 (Aug. 28, 2015): 52300-52324, agency/docket

no. 2015-21246 (RIN 0906-AB08), http://www.gpo.gov/fdsys/pkg/FR-2015-08-28/pdf/2015-21246.pdf.29. Office of Information and Regulatory Affairs, Office of Management and Budget, Executive Office of the President, “Agency Rule

List – Spring 2016: Department of Health and Human Services” (accessed Nov. 15, 2016), http://www.reginfo.gov/public/do/eAgendaMain?operation=OPERATION_GET_AGENCY_RULE_LIST&currentPub=true&agencyCode=&showStage=active&agencyCd=0900.

30. Inside Health Policy, “OMB Reviews Wide-Ranging 340B ‘Mega-Guidance’” (Sep. 2, 2016), https://insidehealthpolicy.com/daily-news/omb-reviews-wide-ranging-340b-mega-guidance.

31. Office of the Press Secretary, The White House, Assistant to the President and Chief of Staff Reince Priebus, “Memorandum for the Heads of Executive Departments and Agencies; Subject: Regulatory Freeze Pending Review” (Jan. 20, 2017), https://www.whitehouse.gov/the-press-office/2017/01/20/memorandum-heads-executive-departments-and-agencies.

32. HRSA, HHS, “Notice of Proposed Rulemaking: 340B Drug Pricing Program; Administrative Dispute Resolution,” Federal Register 81 (Aug. 12, 2016): 53381-53388 (RIN 0906-AA90), https://www.gpo.gov/fdsys/pkg/FR-2016-08-12/pdf/2016-18969.pdf.

33. HRSA, HHS, “Notice of Proposed Rulemaking: 340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation,” Federal Register 80 (June 17, 2015): 34583-34588 (RIN 0906-AA89), https://www.gpo.gov/fdsys/pkg/FR-2015-06-17/pdf/2015-14648.pdf; and, HRSA, HHS, “340B Drug Pricing Program Ceiling Price and Manufacturer Civil Monetary Penalties Regulation,”

Federal Register 82, no. 3 (Jan. 5, 2017): 1210-1230 (RIN 0906-AA89), https://www.gpo.gov/fdsys/pkg/FR-2017-01-05/pdf/2016-31935.pdf.

34. CMS, HHS, “Final Rule: Medicaid and Children’s Health Insurance Program (CHIP) Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, and Revisions Related to Third Party Liability,” Federal Register 81 (May 6, 2016): 27497-27901, agency/docket no. CMS-2390-F (RIN 0938-AS25), https://www.gpo.gov/fdsys/pkg/FR-2016-05-06/pdf/2016-09581.pdf.

35. CMS, HHS, “Proposed rule: Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organization Reporting and Communication; Transplant Outcome Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs; Payment to Certain Off-Campus Outpatient Departments of a Provider; Hospital Value-Based Purchasing (VBP) Program” Federal Register 81 (July 14, 2016): 45603-45788, agency/docket no. CMS-1656-P (RIN 0938-AS82), https://www.gpo.gov/fdsys/pkg/FR-2016-07-14/pdf/2016-16098.pdf.

36. Suzanne Murrin, Deputy Inspector General for Evaluation and Inspections, Office of Inspector General, HHS, “State Efforts to Exclude 340B Drugs from Medicaid Managed Care Rebates” (June 2016), no. OEI-05-14-00430, https://oig.hhs.gov/oei/reports/oei-05-14-00430.pdf.

37. Medicare Payment Advisory Commission, “Report to the Congress: Medicare Payment Policy” (March 2016), http://www.medpac.gov/docs/default-source/reports/march-2016-report-to-the-congress-medicare-payment-policy.pdf.

38. 340B Health, “Letter to the Honorables Paul Ryan, Mitch McConnell, Nancy Pelosi, and Harry Reid re: the 340B program” (Feb. 10, 2016), http://www.340bhealth.org/files/Physician_Letter.pdf.

was found to be more accurate because it permits CEs to dif-ferentiate among specific claims. Consistent with its position in the Medicaid managed care final rule, CMS disagreed with the OIG’s claim-level recommendation. Separately and rele-vant to the forthcoming final 340B Program Omnibus Guidance, HRSA agreed with OIG’s recommendation that, for Medicaid plan drugs, the agency specified that CEs must follow state in-structions to facilitate claim-level identification of drugs purchased through the program. In further comment, HRSA stated how this will be incorporated in the forthcoming final guidance and will be married with public comments received.

In addition, MedPAC vot-ed in January 2016 to recom-mend reducing the Medicare payment rates for a 340B hos-pital’s separately payable Part B drugs by a rate of 10 per-cent and to use the savings for Medicare beneficiaries and the uncompensated care pool—a recommendation released in MedPAC’s March 2016 Report to the Congress.37 In response to MedPAC’s recommendation, the program received public support in February in the form of a let-ter signed by more than 4,700

physicians requesting Congress not make such modifications.38

In January 2016 MedPAC recommended a 10 percent reuduction in Medicare payment

rates for 340B hospitals’ Part B drugs.

10+90+U10%


Append ix


Appendix2016 Report Methodology and Demographics

The methodology for the seventh edition of the Magellan Rx Management Medical Pharmacy Trend Report™ was developed with original guidance from our payer advisory board as well as reader feedback on our previous trend reports.

This report includes a combination of primary and secondary research methodologies to deliver a comprehensive view of payer perceptions and health plan actions related to provider-administered infused or injected drugs paid under the medical benefit, also referred to as medical pharmacy drugs. These medical benefit drugs are commonly used to treat cancer, autoimmune disorders, and immunodeficiencies.

The results of this study were a combination of findings from a survey of medical, pharmacy, and network directors at commercial health plans, as well as medical benefit paid claims data across key lines of business (i.e., commercial and Medicare Advantage) and outpatient sites of service and provider types (i.e., physician offices, homes via home infusion, specialty pharmacies, and hospital outpatient facilities). In a shift from previous years, payer survey responses and paid claims data are distributed throughout all six sections of the report. In light of this shift in reporting, full reports and exhibits will be available in the appendix.

Payer SurveyThe 2016 Medical Pharmacy Trend Report™ payer survey

included insights from U.S. health plans representing more than 109 million medical pharmacy lives. Data collection took place over two months in summer 2016 through a custom market research survey consisting of topics ranging from utilization and management trends to benefit design and provider network landscape. Validated results were analyzed based on percentage of payers or lives. Methodology for survey data analyses included stratification of payer sample by covered lives, small versus large plans, geographic dispersion, and respondent type (i.e., medical, pharmacy or network directors).

Survey Respondent SampleThe payer survey included insights from a total of 49 U.S. payers

representing more than 109 million medical pharmacy lives. Of the total number of respondents, 38 payers indicated they were responsible for managing Medicare Advantage lives in addition to their commercial population. Throughout the survey, these respondents were asked questions for their Medicare lines of business in addition to their commercial lines of business.

Respondents represented an array of plan sizes as defined in

FIGURE 112

2016 Respondent Sample

COVERED LIVES TOTAL COUNT TOTAL LIVES TOTAL LIVES (%)

Less than 500,000 22 (45%) 5,434,218 5%

500,000 to 999,999 5 (10%) 3,546,477 3%

1,000,000 to 4,999,999 16 (33%) 31,902,300 29%

5,000,000 or more 6 (12%) 68,120,928 63%

Total 49 109,003,923 100%


figure 112. The respondent sample was split close to even with small plans, defined as less than 500,00 lives, representing close to half (45 percent) of the respondent sample. Larger plans represented the remaining 55 percent. Health plan respondents were mainly pharmacy directors (82 percent) and medical directors (12 percent). The remaining respondents were provider network directors (six percent).

FIGURE 113

2016 Payer Respondent Positions(n=49; 109 million lives)

Medical Director/VP Pharmacy Director/VP

Network Director/VP 12+82+6+u12%

82%

6%

% of Payers

Survey participants represented all major lines of business beyond commercial and Medicare Advantage, including managed Medicaid and Health Insurance Exchange. Most respondents (68 percent) indicated an increase in health insurance exchange lives in 2016, in line with the national marketplace, although this may shift again in 2017 with various large insurers leaving the healthcare exchange marketplace (see Legislative Trends section). Overall, the largest line of business was commercial, representing 63 percent of the lives, while 10 percent of lives were attributed to Medicare Advantage (see figure 114).


DRUG CATEGORY EXAMPLE DRUGS

Alpha-1-Antitrypsin Deficiency Aralast, Glassia, Prolastin, Zemaira

Antiemetics: Chemotherapy-Induced Nausea and Vomiting (CINV)

Aloxi, Zofran IV, Kytril IV

Antihemophilic Factors Advate, Xyntha, Recombinate

Anti-Vascular Endothelial Growth Factors Avastin, Vectibix, Erbitux, Zaltrap

Biologic Drugs for Autoimmune Disorders Remicade, Orencia, Cimzia, Actemra, Simponi ARIA, Stelara, Entyvio

Bone Resorption Inhibitors: Oncology Zometa, Aredia, Xgeva

Bone Resorption Inhibitors: Osteoporosis Reclast, Boniva, Prolia

Botulinum Toxins Botox, Xeomin, Dysport, Myobloc

Colony-Stimulating Factors (CSFs) Neulasta, Neupogen, Leukine, Granix, Zarxio

Contraceptives Mirena, Skyla, Liletta

Enzyme Replacement Therapy Vpriv, Cerezyme, Elelyso

Erythropoiesis-Stimulating Agents (ESAs) Aranesp, Procrit, Epogen

Folinic Acid Fusilev, leucovorin

Gonadotropin-Releasing Hormone Agents Eligard, Lupron, Trelstar, Zoladex

Hereditary Angioedema Agents Cinryze, Berinert, Kalbitor

Intravenous Immune Globulin (IVIG) Gamunex, Gammagard

Intravenous Irons Feraheme, Ferrlecit, Injectafer, Venofer

Multiple Sclerosis Tysabri, Lemtrada

Ophthalmic Injections Lucentis, Eylea, Macugen, bevacizumab

Pulmonary Arterial Hypertension Agents

Flolan, Remodulin, Revatio IV, Veletri, Tyvaso, Ventavis

Subcutaneous Immune Globulin (SCIG) Hizentra, HyQvia

Taxanes Taxol, Abraxane

Viscosupplementation Orthovisc, Synvisc, Supartz, Hyalgan, Euflexxa, Gel-One, Monovisc

Survey respondents from national plans constituted 12 percent of payers but represented 47 percent of total lives. Regional plans accounted for the other 53 percent of covered lives. The map in figure 115 illustrates the geographic distribution of regional plan lives showing an almost equal split on the east and west coasts; 45 percent were located in the east and 46 percent of lives were located in the west. This represents a more balanced sample from 2015 when 60 percent of lives were located in the east.

Therapeutic Classes RepresentedTherapeutic classes represented in the survey were inclusive of

current medical benefit drugs. To ensure accuracy of responses, payer respondents were provided with examples of drugs for each of the categories presented (see figure 116).

Health Plan Claims DataMedical benefit drug utilization and trend data were collected

through secondary analyses of commercial and Medicare Advantage health plan medical paid claims data for the most recent calendar years. Claims data were analyzed for medical pharmacy utilization across 925 HCPCS codes and several outpatient sites of service, including the physician office, home infusion, and hospital outpatient facility. Claims billed from participating and non-participating providers were included. Vaccines and radiopharmaceuticals were excluded from the analyses. Administration codes were analyzed separately in only one analysis (see figures 94, 95, A33 thru A35); their utilization was not included in any other analysis. Most analyses compared calendar years 2014 and 2015. In some cases, the past three to five years were analyzed to show a longer period of year over year spend and trend. Year over year, shifts in claims data information have occurred due to adjustments. In addition, the report previously evaluated medical pharmacy utilization across all outpatient sites of care, including “other.” This report was focused solely on physician office, hospital outpatient, home infusion, and specialty pharmacy due to inconsistencies in volume and utilization patterns across the portfolio.

FIGURE 116

Medical Benefit Drug Examples for Therapeutic Categories in Payer Survey

FIGURE 115

Regional Plans – Geographic Dispersion of Lives(n=43; 58 million lives) National plans represented across all 50 states and D.C. were not included in this analysis.

46% 45%9%

FIGURE 114

2016 Lives by Line of Business(n=49, 109 million lives)

Commercial Medicare Advantage

Exchanges

Managed Medicaid 63+10+14+13+x63%10%

13%

14%

Lives by LOB

Append ix

2011 2012 2013 2014 2015

Commercial

Home Infusion/Specialty Pharmacy $2.58 $2.73 $3.10 $3.24 $3.82

Hospital Outpatient $7.12 $8.13 $9.69 $10.94 $12.23

Physician Office $5.57 $5.72 $5.92 $6.77 $7.62

Total $15.27 $16.57 $18.71 $20.95 $23.68

Medicare

Home Infusion/Specialty Pharmacy $3.07 $2.87 $3.92 $4.04 $3.42

Hospital Outpatient $14.65 $18.44 $18.38 $19.06 $17.23

Physician Office $25.90 $22.54 $23.96 $22.13 $25.36

Total $43.63 $43.85 $46.26 $45.23 $46.01

Medical Pharmacy Allowed Amount PMPM by LOB by Site of Service 2011-2015

A1

Medical Benefit Drug Trends Supplement

Medical Pharmacy Percentage Spend by LOB by Site of Service 2011-2015

A2

2011 2012 2013 2014 2015

Commercial

Home Infusion/Specialty Pharmacy 17% 16% 17% 15% 16%

Hospital Outpatient 47% 49% 52% 52% 52%

Physician Office 36% 34% 32% 32% 32%

Medicare

Home Infusion/Specialty Pharmacy 7% 7% 8% 9% 7%

Hospital Outpatient 34% 42% 40% 42% 37%

Physician Office 59% 51% 52% 49% 55%

Commercial Top 100 Medical Benefit Drugs by PMPM

A3

% Change

2011 2012 2013 2014 2015 2011-2012 2012-2013 2013-2014 2014-2015 2011-2015

Top 10 $7.59 $7.95 $8.79 $9.74 $10.65 5% 11% 11% 9% 40%

Top 25 $10.37 $10.91 $12.07 $13.51 $14.54 5% 11% 12% 8% 40%

Top 50 $12.66 $13.49 $14.95 $16.71 $18.19 7% 11% 12% 9% 44%

Top 100 $14.23 $15.37 $17.22 $19.27 $21.31 8% 12% 12% 11% 50%

Total (All Medical Benefit Drugs) $15.27 $16.57 $18.71 $20.95 $23.68 8% 13% 12% 13% 55%

Medicare Top 100 Medical Benefit Drugs by PMPM

A4

% Change

2011 2012 2013 2014 2015 2011-2012 2012-2013 2013-2014 2014-2015 2011-2015

Top 10 $21.81 $22.15 $22.09 $21.68 $23.11 2% 0% -2% 7% 6%

Top 25 $32.33 $31.87 $31.81 $31.53 $32.79 -1% 0% -1% 4% 1%

Top 50 $38.79 $38.75 $39.53 $39.19 $39.83 0% 2% -1% 2% 3%

Top 100 $42.38 $42.39 $44.44 $43.40 $44.21 0% 5% -2% 2% 4%

Total $43.63 $43.85 $46.26 $45.23 $46.01 1% 5% -2% 2% 5%



2015 Commercial Allowed Amount PMPM by Disease State or Drug Category

A5

Rank Disease or Drug Category PMPM % of Allowed Amount PMPM % of Members Members per 1,000*

1 Oncology $8.45 36% 2% 4.7

2 Oncology Support: Colony-Stimulating Factors $1.99 8% 1% 1.2

3 Immune Globulin $1.92 8% 0.18% 0.44

4 BDAID: Crohn’s Disease/Ulcerative Colitis $1.66 7% 0.25% 0.58

5 BDAID: Rheumatoid Arthritis $1.06 4% 0.22% 0.47

6 Antihemophilic Factor $0.90 4% 0.02% 0.06

7 Enzyme Replacement Therapy $0.56 2% 0.01% 0.02

8 Multiple Sclerosis $0.52 2% 0.05% 0.12

9 Oncology Support: Antiemetics $0.46 2% 6% 17.0

10 BDAID: Psoriasis/Psoriatic Arthritis $0.46 2% 0.08% 0.17

11 Unclassified $0.45 2% 3% 6.5

12 Infectious Disease $0.42 2% 7% 16.3

13 Other $0.42 2% 12% 27.6

14 Rare Diseases $0.32 1% 0.004% 0.01

15 Ophthalmic Injections $0.31 1% 0.44% 0.86

16 Botulinum Toxins $0.31 1% 1% 1.4

17 Contraceptives $0.29 1% 3% 5.4

18 Asthma/COPD $0.27 1% 3% 6.2

19 Oncology Support: Gastrointestinal $0.24 1% 0.03% 0.07

20 Hereditary Angioedema $0.22 1% 0.004% 0.01

21 Viscosupplementation $0.21 1% 1% 2.5

22 Pain Management $0.19 1% 12% 29.5

23 BDAID: Systemic Lupus Erythematosus $0.16 1% 0.02% 0.05

24 Iron, Intravenous $0.14 1% 1% 1.4

25 BDAID: Other $0.14 1% 0.04% 0.10

26 Fluids $0.13 1% 7% 17.5

27 Pulmonary Arterial Hypertension $0.13 1% 0.005% 0.01

28 Hematology $0.12 1% 0.01% 0.03

29 Alpha-1 Proteinase Inhibitor (for Emphysema) $0.12 1% 0.01% 0.02

30 Anticoagulants $0.11 0.5% 1% 3.9

31 Corticosteroids $0.11 0.4% 29% 58.6

32 Sedatives/Anesthesia $0.10 0.4% 7% 18.6

33 Oncology Support: Erythropoiesis-Stimulating Agents $0.10 0.4% 0.10% 0.22

34 End-Stage Renal Disease: Erythropoiesis-Stimulating Agents $0.09 0.4% 0.03% 0.09

35 Thyroid Agents $0.08 0.4% 0.07% 0.18

36 Corticotropin, ACTH $0.08 0.3% 0.07% 0.16

37 Cardiovascular Agents $0.08 0.3% 2% 5.2

38 BDAID: Ankylosing Spondylitis $0.08 0.3% 0.02% 0.03

39 Bone Resorption Inhibitors (Osteoporosis) $0.36 2% 0.44% 0.96

40 Rare Autoinflammatory Conditions, Cryopyrin-Associated Periodic Syndromes $0.04 0.2% 0.002% 0.004

41 Progestins $0.04 0.2% 0.04% 0.08

42 Testosterone $0.03 0.1% 1% 1.1

43 Skeletal Muscle Relaxants $0.03 0.1% 0.12% 0.29

44 Diabetes $0.02 0.1% 0.28% 0.72

45 Gout $0.02 0.1% 0.001% 0.003

46 Rho (D) Immune Globulin $0.01 0.1% 0.40% 0.87

47 Antipsychotics $0.01 0.05% 0.05% 0.60

48 Transplant Agents $0.01 0.02% 0.02% 0.05

49 Growth Hormone $0.01 0.02% 0.001% 0.003



Append ix

2015 Medicare Allowed Amount PMPM by Disease State or Drug Category

A6

Rank Disease or Drug Category PMPM % of Allowed Amount PMPM

% of Members Members per 1,000*

1 Oncology $19.07 41% 6% 22.1

2 Ophthalmic Injections $5.25 11% 4% 14.6

3 Oncology Support: Colony-Stimulating Factors $4.32 9% 1% 4.3

4 Immune Globulin $2.98 6% 0.32% 1.1

5 BDAID: Rheumatoid Arthritis $2.49 5% 0.42% 1.5

6 Oncology Support: Erythropoiesis-Stimulating Agents $1.22 3% 1% 3.0

7 Viscosupplementation $0.88 2% 4% 12.6

8 Oncology Support: Gastrointestinal $0.78 2% 0.08% 0.29

9 Multiple Sclerosis $0.70 2% 0.06% 0.20

10 Infectious Disease $0.70 2% 4% 15.2

11 Unclassified $0.70 2% 1% 4.1

12 BDAID: Crohn’s Disease/Ulcerative Colitis $0.67 1% 0.10% 0.35

13 Oncology Support: Antiemetics $0.66 1% 4% 12.9

14 Rare Diseases $0.62 1% 0.004% 0.01

15 Asthma/COPD $0.54 1% 2% 8.2

16 Other $0.40 1% 12% 40.46

17 BDAID: Psoriasis/Psoriatic Arthritis $0.40 1% 0.05% 0.18

18 Enzyme Replacement Therapy $0.39 1% 0.003% 0.01

19 Pulmonary Arterial Hypertension $0.39 1% 0.02% 0.06

20 Botulinum Toxins $0.34 1% 1% 2.1

21 Bone Resorption Inhibitors (Osteoporosis) $0.32 1% 1% 4.3

22 Antihemophilic Factor $0.31 1% 0.01% 0.03

23 Hematology $0.30 1% 0.03% 0.10

24 Alpha-1 Proteinase Inhibitor (for Emphysema) $0.25 1% 0.01% 0.04

25 Iron, Intravenous $0.23 1% 1% 3.5

26 Cardiovascular Agents $0.19 0.4% 3% 9.7

27 Corticosteroids $0.18 0.4% 38% 126.9

28 BDAID: Other $0.11 0.2% 0.03% 0.10

29 Pain Management $0.09 0.2% 6% 20.6

30 End-Stage Renal Disease: Erythropoiesis-Stimulating Agents $0.09 0.2% 0.07% 0.28

31 Anticoagulants $0.09 0.2% 1% 5.1

32 BDAID: Ankylosing Spondylitis $0.07 0.2% 0.01% 0.05

33 BDAID: Systemic Lupus Erythematosus $0.05 0.1% 0.01% 0.03

34 Fluids $0.05 0.1% 4% 13.0

35 Thyroid Agents $0.04 0.1% 0.06% 0.21

36 Sedatives/Anesthesia $0.04 0.1% 3% 11.3

37 Transplant Drugs or Agents $0.03 0.1% 0.04% 0.15

38 Skeletal Muscle Relaxants $0.03 0.1% 0.11% 0.36

39 Antipsychotics $0.02 0.1% 0.07% 0.26

40 Diabetes $0.01 0.03% 0.27% 1.0

41 Testosterone $0.01 0.03% 0.25% 0.85

42 Gout $0.01 0.01% 0.001% 0.003



2015 ASP and AWP Reimbursement Trends by Selected Disease State or Drug Category

A7

Disease or Drug Category ASP AWP

Alpha-1 Proteinase Inhibitor (For Emphysema) 8% 5%

Antihemophilic Factor 5% 25%

BDAID: Psoriasis/Psoriatic Arthritis 7% 5%

BDAID: Rheumatoid Arthritis 12% 13%

BDAID: Systemic Lupus Erythematosus 4% 5%

Bone Resorption Inhibitors (Osteoporosis) -13% 11%

Botulinum Toxins 4% 4%

Contraceptives 20% 2%

Corticotropin, ACTH 1% 1%

Cystic Fibrosis -14% 5%

End Stage Renal Disease: Erythropoiesis-Stimulating Agents 5% 2%

Enzyme Replacement Therapy 2% 2%

Gout 35% 17%

Growth Hormone n/a 12%

Hematology 29% 19%

Hereditary Angioedema 11% 9%

Human Immunodeficiency Virus 0% 2%

Immune Globulin 9% 4%

Infectious Disease 15% 7%

Infertility 10% 11%

Iron, Intravenous 5% 4%

Multiple Sclerosis 14% 7%

Oncology 6% 7%

Oncology Support: Antiemetics -4% 4%

Oncology Support: Colony-Stimulating Factors 5% 4%

Oncology Support: Erythropoiesis-Stimulating Agents 5% 3%

Oncology Support: Gastrointestinal 9% 7%

Ophthalmic Injections 0% 1%

Other 23% 59%

Pain Management 1% 7%

Pulmonary Arterial Hypertension 4% 12%

Rare Autoinflammatory Conditions, Cryopyrin-Associated Periodic Syndromes 1% 0%

Viscosupplementation -1% 5%


Medical Benefit Market Share Supplement

A8

A10

A12

A9

A11

A13

Commercial Bone Resorption Inhibitors (Oncology) Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Commercial Bone Resorption Inhibitors (Osteoporosis) Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Commercial Botulinum Toxins Market Share and Allowed Amount PMPM 2014-2015

Medicare Bone Resorption Inhibitors (Oncology) Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Medicare Bone Resorption Inhibitors (Osteoporosis) Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

2015 Commercial Botulinum Toxins Market Share and Allowed Amount PMPM by Site of Service

Brand Market Share Annual Cost per Patient

Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Pamidronate (Aredia) 3% 3% $541 $582 $0.00 $0.00

Zoledronic Acid (Zometa)

36% 33% $2,872 $2,589 $0.07 $0.06

Xgeva 60% 64% $7,090 $7,131 $0.31 $0.34

TOTAL $0.38 $0.41


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Ibandronate (Boniva) 3% 3% $1,504 $1,374 $0.00 $0.00

Prolia 0% 0% $828 — $0.03 $0.05

Zoledronic Acid (Reclast)

62% 67% $1,285 $1,391 $0.01 $0.01

TOTAL $0.05 $0.06


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Botox 95% 94% $2,124 $2,580 $0.23 $0.29

Dysport 3% 3% $1,403 $1,490 $0.00 $0.01

Myobloc 1% 1% $1,668 $2,530 $0.00 $0.00

Xeomin 1% 2% $1,412 $1,668 $0.00 $0.00

TOTAL $0.24 $0.31


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Pamidronate (Aredia) 3% 2% $387 $369 $0.00 $0.00

Zoledronic Acid (Zometa)

21% 23% $1,651 $949 $0.16 $0.09

Xgeva 76% 75% $3,455 $3,760 $1.18 $1.19

TOTAL $1.34 $1.29


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Ibandronate (Boniva) 3% 2% $1,238 $1,131 $0.01 $0.01

Prolia 0% 0% — — $0.20 $0.27

Zoledronic Acid (Reclast)

67% 64% $1,200 $1,173 $0.04 $0.04

TOTAL $0.25 $0.32

Brand Market Share Allowed Amount PMPM

HI/SPP

Hospital OP

Physician HI/SPP

Hospital OP

Physician

Botox 99% 94% 92% $0.06 $0.06 $0.17

Dysport 0% 0% 5% — $0.00 $0.01

Myobloc 0% 4% 1% $0.00 $0.00 $0.00

Xeomin 1% 1% 3% $0.00 $0.00 $0.00

TOTAL $0.06 $0.06 $0.18

Bone Resorption Inhibitors (Oncology)

Bone Resorption Inhibitors (Osteoporosis)

Botulinum Toxins


Append ix


A14 A15

Medicare Botulinum Toxins Market Share and Allowed Amount PMPM 2014-2015

2015 Medicare Botulinum Toxins Market Share and Allowed Amount PMPM by Site of Service


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Botox 94% 95% $1,890 $1,900 $0.33 $0.32

Dysport 2% 2% $1,855 $3,277 $0.01 $0.01

Myobloc 2% 2% $2,182 $2,911 $0.01 $0.01

Xeomin 2% 2% $1,557 $1,564 $0.01 $0.01

TOTAL $0.35 $0.34


HI/SPP Hospital OP

Physician HI/SPP Hospital OP

Physician

Botox 100% 97% 94% $0.01 $0.05 $0.26

Dysport 0% 0% 2% — — $0.01

Myobloc 0% 3% 2% — $0.00 $0.01

Xeomin 0% 0% 2% — — $0.01

TOTAL $0.01 $0.06 $0.28

Folinic AcidA16

A18

A17

A19

Commercial Folinic Acid Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Medicare Folinic Acid Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

2015 Commercial Folinic Acid Market Share and Allowed Amount PMPM by Site of Service

2015 Medicare Folinic Acid Market Share and Allowed Amount PMPM by Site of Service


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Leucovorin 73% 85% $778 $927 $0.02 $0.02

Fusilev 27% 15% $13,752 $11,139 $0.10 $0.04

TOTAL $0.12 $0.07


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Leucovorin 73% 81% $426 $434 $0.02 $0.02

Fusilev 27% 19% $8,180 $9,207 $0.15 $0.10

TOTAL $0.17 $0.12


Hospital OP Physician Hospital OP Physician

Leucovorin 95% 79% $0.02 $0.01

Fusilev 5% 21% $0.01 $0.03

TOTAL $0.03 $0.04



Leucovorin 85% 80% $0.01 $0.02

Fusilev 15% 20% $0.01 $0.10

TOTAL $0.01 $0.11



A20

A22

A24

A21

A23

A25

Commercial Antiemetics Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Medicare Antiemetics Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

Commercial Colony-Stimulating Factors Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

2015 Commercial Antiemetics Market Share and Allowed Amount PMPM by Site of Service

2015 Medicare Antiemetics Market Share and Allowed Amount PMPM by Site of Service

2015 Commercial Colony-Stimulating Factors Market Share and Allowed Amount PMPM by Site of Service


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Granisetron (Kytril) 3% 2% $275 $301 $0.01 $0.01

Ondansetron (Zofran) 86% 89% $47 $41 $0.05 $0.05

Aloxi 11% 9% $2,173 $2,344 $0.24 $0.24

TOTAL $0.30 $0.30


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Granisetron (Kytril) 12% 7% $90 $72 $0.01 $0.00

Ondansetron (Zofran) 40% 56% $58 $36 $0.02 $0.02

Aloxi 47% 37% $1,186 $1,089 $0.47 $0.40

TOTAL $0.50 $0.42


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Neupogen 24% 23% $4,450 $4,480 $0.13 $0.11

Neulasta 72% 71% $19,231 $22,184 $1.73 $1.84

Leukine 1% 1% $3,830 $4,375 $0.00 $0.00

Granix 3% 5% $5,274 $5,602 $0.02 $0.04

Zarxio 0% 0% – $1,558 – $0.00

TOTAL $1.88 $1.99



Granisetron (Kytril) 1% 9% $0.01 $0.00

Ondansetron (Zofran) 96% 57% $0.05 $0.00

Aloxi 3% 35% $0.14 $0.10

TOTAL $0.19 $0.10



Granisetron (Kytril) 1% 16% $0.00 $0.00

Ondansetron (Zofran) 74% 29% $0.02 $0.00

Aloxi 25% 55% $0.15 $0.25

TOTAL $0.17 $0.26


HI/SPP Hospital Physician HI/SPP Hospital Physician

Neupogen 69% 16% 27% $0.01 $0.05 $0.06

Neulasta 27% 72% 71% $0.00 $1.15 $0.68

Leukine 4% 0% 1% $0.00 $0.00 $0.00

Granix 0% 11% 2% — $0.03 $0.00

Zarxio 0% 0% 0% — $0.00 $0.00

TOTAL $0.01 $1.24 $0.75

Oncology SupportThe antiemetics market share report reflects utilization of intravenous serotonin antagonists indicated for chemotherapy-induced

nausea and vomiting treatment and prevention; however, all utilization for these three agents is captured and is not limited to its oncology use only. The Oncology: Antiemetics category previously reported includes additional oral and IV antiemetic agents and explains the higher PMPM spend seen previously in the disease state/drug category analyses.


Append ix


A26 A27

Medicare Colony-Stimulating Factors Market Share, Annual Cost per Patient and Allowed Amount PMPM 2014-2015

2015 Medicare Colony-Stimulating Factors Market Share and Allowed Amount PMPM by Site of Service


Allowed Amount PMPM

2014 2015 2014 2015 2014 2015

Neupogen 17% 16% $3,416 $3,246 $0.22 $0.20

Neulasta 78% 77% $12,989 $13,408 $3.70 $4.02

Leukine 3% 0% $2,965 $1,485 $0.03 $0.00

Granix 2% 7% $3,357 $3,437 $0.03 $0.09

Zarxio 0% 0% – $1,998 – $0.00

TOTAL $3.98 $4.32



Neupogen 15% 16% $0.09 $0.11

Neulasta 77% 77% $1.92 $2.10

Leukine 0% 0% — $0.00

Granix 8% 6% $0.05 $0.04

Zarxio 0% 1% $0.00 $0.00

TOTAL $2.06 $2.26



Append ix

20+20+20+20+20+13+13+14+14+12+12+10+10+5+88+60+52+45+45+43+40+40+36+36+31+24+24+21+19+17+

Medical Benefit Landscape Trends Supplement

60%

52%

45%

45%

43%

40%

40%

80% 14%

14%

12%

12%

10%

10%

5%


Antihemophilic Factors

Folinic Acid

Hereditary Angioedema Agents

Intravenous Irons

Taxanes


24%

24%

21%

19%

17%

36%

36%

31%


Contraceptives

Intravenous Immune Globulin (IVIG)


Alpha-1-Antitrypsin Deficiency


Subcutaneous Immune Globulin (SCIG)

Bone Resorption Inhibitors: OncologyBiologic Drugs for Autoimmune Disorders




Multiple Sclerosis


Antiemetics: Chemotherapy-Induced Nausea and Vomiting

Botulinum Toxins

2016 Commercial Medical Benefit Product Preferencing in Place by Drug Category

A28

% of Payers(n=42; 101 million covered lives)

2016 Medicare Medical Benefit Product Preferencing in Place by Drug Category % of Payers(n=8; 36 million covered lives)

A29

20%

20%

20%

20%

20%

13%

13%


Taxanes


Hereditary Angioedema Treatments

Pulmonary Arterial Hypertension Treatments


Contraceptives

53%

47%

47%

47%

33%

27%

27%

27%

53+47+47+47+33+27+27+27+Intravenous Immune Globulin (IVIG)

Intravenous Irons

Folinic Acid

Antihemophilic Factors





80%

73%

67%

60%

60%

60%

60%

60%

80+73+67+60+60+60+60+60+Biologic Drugs for Autoimmune Disorders



Botulinum Toxins

Multiple Sclerosis





20+20+20+20+20+13+13+14+14+12+12+10+10+5+

2016 Commercial Utilization Management Tools for Medical Benefit Drugs by Disease State or Drug Category (% of payers) (n=49; 109 million covered lives)

A30

Disease State or Drug Category

Care Management ( i.e., Disease Management

or Case Management)

Clinical Pathways

Differential Provider

Reimbursement by Drug in

Therapy Class

Dose Optimization

Patient Adherence

Program


Prior Authorization

Site of Service

Step Edit Requirements

None Other Average


31% 2% 2% 8% 6% 12% 69% 14% 4% 22% 2% 16%


20% 12% 6% 10% 4% 14% 59% 6% 14% 27% 2% 16%

Antihemophilic Factors 31% 2% 2% 16% 6% 10% 55% 22% 2% 22% 6% 16%


24% 10% 10% 10% 4% 16% 69% 8% 6% 16% 2% 16%

Biologic Drugs for Autoimmune Disorders

31% 8% 8% 16% 10% 14% 92% 18% 33% 4% 2% 22%


16% 12% 2% 10% 4% 6% 84% 10% 16% 12% 2% 16%


10% 8% 2% 8% 4% 6% 80% 12% 18% 18% 2% 15%

Botulinum Toxins 10% 6% 8% 10% 4% 12% 88% 12% 22% 2% 2% 16%


16% 8% 2% 12% 4% 10% 71% 16% 14% 16% 4% 16%

Contraceptives 8% 2% 2% 6% 4% 6% 24% 8% 8% 61% 6% 12%


14% 2% 2% 6% 4% 8% 71% 16% 4% 24% 2% 14%


16% 10% 4% 6% 4% 12% 76% 8% 18% 18% 2% 16%

Folinic Acid 10% 4% 2% 4% 4% 6% 47% 0% 8% 47% 2% 12%


16% 4% 2% 8% 4% 8% 71% 8% 10% 18% 6% 14%

Hereditary Angioedema Treatments

22% 4% 2% 6% 6% 10% 80% 8% 6% 14% 2% 15%

Intravenous Immune Globulin (IVIG)

24% 8% 4% 16% 4% 14% 88% 22% 6% 2% 4% 18%

Intravenous Irons 16% 4% 0% 4% 4% 8% 55% 4% 4% 33% 4% 12%

Multiple Sclerosis 33% 6% 2% 4% 10% 12% 84% 12% 20% 8% 2% 18%

Ophthalmic Injections 14% 6% 4% 4% 4% 8% 57% 4% 14% 20% 2% 13%


33% 4% 2% 4% 4% 10% 84% 4% 6% 8% 4% 15%


16% 4% 0% 8% 4% 12% 84% 12% 4% 14% 2% 15%

Taxanes 14% 6% 2% 4% 4% 6% 55% 2% 6% 35% 2% 12%

Viscosupplementation 12% 6% 4% 4% 4% 10% 76% 6% 18% 18% 8% 15%

Average 19% 6% 3% 8% 5% 10% 70% 10% 12% 20% 3%


Append ix

A31

A32

Disease State or Drug Category Care Management (i.e., Disease Management or

Case Management)

Clinical Pathways


Prior Authorization

Site of Service

None Average

Alpha-1-Antitrypsin Deficiency 25% 0% 13% 50% 0% 25% 19%

Antiemetics: Chemotherapy-Induced Nausea and Vomiting 13% 13% 13% 38% 0% 38% 19%

Antihemophilic Factors 25% 0% 13% 25% 13% 50% 21%

Anti-Vascular Endothelial Growth Factors 13% 13% 13% 38% 0% 50% 21%

Biologic Drugs for Autoimmune Disorders 25% 0% 13% 75% 13% 13% 23%

Bone Resorption Inhibitors: Oncology 13% 13% 13% 50% 13% 38% 23%

Bone Resorption Inhibitors: Osteoporosis 13% 0% 13% 38% 13% 50% 21%

Botulinum Toxins 13% 0% 13% 75% 0% 13% 19%

Colony-Stimulating Factors (CSFs) 13% 0% 13% 38% 13% 38% 19%

Contraceptives 13% 0% 13% 25% 0% 50% 17%

Enzyme Replacement Therapy 25% 0% 13% 50% 0% 25% 19%

Erythropoiesis-Stimulating Agents (ESAs) 13% 13% 25% 63% 13% 25% 25%

Folinic Acid 13% 0% 13% 38% 0% 38% 17%

Gonadotropin-Releasing Hormone Agents 13% 0% 13% 38% 13% 38% 19%

Hereditary Angioedema Agents 25% 0% 13% 63% 0% 25% 21%

Intravenous Immune Globulin (IVIG) 25% 0% 13% 75% 13% 25% 25%

Intravenous Irons 13% 0% 13% 25% 0% 50% 17%

Multiple Sclerosis 13% 0% 13% 63% 0% 25% 19%

Ophthalmic Injections 13% 0% 13% 50% 0% 38% 19%

Pulmonary Arterial Hypertension Treatments 25% 0% 13% 75% 0% 13% 21%

Subcutaneous Immune Globulin (SCIG) 13% 0% 13% 75% 13% 25% 23%

Taxanes 13% 13% 13% 25% 0% 50% 19%

Viscosupplementation 13% 0% 13% 75% 0% 25% 21%

Average 16% 3% 13% 51% 5% 33%

2016 Medicare Utilization Management Tools for Medical Benefit Drugs by Disease State or Drug Category (% of payers)


2016 Commercial Rebates Received by Disease State or Drug Category (% of payers)


Disease State or Drug Category % of Payers % of Lives

Biologic Drugs for Autoimmune Disorders 67% 55%

Viscosupplementation 45% 40%

Erythropoiesis-Stimulating Agents (ESAs) 40% 70%

Colony-Stimulating Factors (CSFs) 38% 51%

Contraceptives 31% 27%

Botulinum Toxins 26% 58%

Multiple Sclerosis 24% 18%

Enzyme Replacement Therapy 19% 40%

Gonadotropin-Releasing Hormone Agents 19% 17%

Intravenous Immune Globulin (IVIG) 19% 32%

Pulmonary Arterial Hypertension Treatments 19% 18%


Bone Resorption Inhibitors: Osteoporosis 17% 18%

No Rebates 14% 5.9%

Bone Resorption Inhibitors: Oncology 12% 18%

Antihemophilic Factors 10% 12%

Ophthalmic Injections 10% 20%

Subcutaneous Immune Globulin (SCIG) 10% 23%

Anti-Vascular Endothelial Growth Factors 7% 10%

Alpha-1-Antitrypsin Deficiency 5% 10%

Antiemetics: Chemotherapy-Induced Nausea and Vomiting (CINV) 5% 20%

Hereditary Angioedema Treatments 5% 10%


Unit Cost

CPT CODE CPT DESCRIPTION HOSPITAL OP PHYSICIAN OFFICE TOTAL PMPM HOSPITAL OP PHYSICIAN OFFICE


$0.60 $0.24 $0.85 $608.58 $209.78

95165 Supervision of preparation and provision of antigens for allergen immunotherapy; single or multiple antigens (specify number of doses)

$0.01 $0.45 $0.46 $24.72 $13.57


$0.33 $0.08 $0.41 $402.48 $91.76


$0.34 $0.03 $0.37 $142.03 $35.28

90460 Immunization administration through 18 years of age via any route of administration, with counseling by physician or other qualified healthcare professional; first vaccine/toxoid component

$0.00 $0.33 $0.33 $22.99 $22.37

90471 Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); 1 vaccine (single or combination vaccine/toxoid)

$0.03 $0.28 $0.32 $77.42 $24.79

96372 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular

$0.12 $0.18 $0.30 $111.10 $28.58

96374 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); intravenous push, single or initial substance/drug

$0.24 $0.01 $0.26 $209.35 $75.85


96367 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); additional sequential infusion of a new drug/substance, up to 1 hour

$0.10 $0.05 $0.15 $186.02 $44.36

96415 Chemotherapy administration, intravenous infusion technique; each additional hour $0.09 $0.03 $0.13 $200.31 $45.97

96417 Chemotherapy administration, intravenous infusion technique; each additional sequential infusion (different substance/drug), up to 1 hour

$0.09 $0.03 $0.12 $310.71 $104.45

90461 Immunization administration each additional component $0.00 $0.12 $0.12 $14.31 $11.40

96360 Intravenous infusion, hydration; initial, 31 minutes to 1 hour $0.08 $0.01 $0.10 $295.48 $82.73

95117 Immunotherapy injections $0.00 $0.08 $0.09 $70.89 $14.11

99601 Home infusion/specialty drug administration, per visit (up to 2 hours) $0.00 $0.00 $0.09 $160.99 $118.05

96366 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); each additional hour

$0.07 $0.01 $0.09 $132.34 $32.77

96411 Chemotherapy administration; intravenous, push technique, each additional substance/drug $0.06 $0.02 $0.07 $300.40 $91.81

96416 Chemotherapy administration, intravenous infusion technique; initiation of prolonged chemotherapy infusion (more than 8 hours), requiring use of a portable or implantable pump

$0.05 $0.02 $0.07 $625.71 $230.54

96401 Chemotherapy administration, subcutaneous or intramuscular; nonhormonal antineoplastic $0.02 $0.04 $0.06 $256.01 $87.71

Commercial Top Hospital and Physician Office Administration Codes by Allowed Amount PMPM, Unit Cost, and Site of Service

A33


Folinic Acid 2% 10%

Intravenous Irons 2% 10%

Taxanes 2% 10%

A32 CONTINUED

2016 Commercial Rebates Received by Disease State or Drug Category, cont. (% of payers) (n=49; 109 million covered lives)


Allowed Amount PMPM


Append ix

Commercial Top Hospital and Physician Office Administration Codes by Allowed Amount PMPM, Unit Cost, and Site of Service (cont.)

A33 CONTINUED

Medicare Top Hospital and Physician Office Administration Codes by Allowed Amount PMPM, Unit Cost, and Site of Service

A34



$0.87 $0.37 $1.23 $295.33 $146.09


$0.34 $0.09 $0.43 $179.82 $72.24

96372 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular

$0.17 $0.23 $0.40 $52.62 $24.23

96367 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); additional sequential infusion of a new drug/substance, up to 1 hour

$0.15 $0.09 $0.25 $55.52 $31.58

90471 Immunization administration (includes percutaneous, intradermal, subcutaneous, or intramuscular injections); 1 vaccine (single or combination vaccine/toxoid)

$0.01 $0.19 $0.20 $57.24 $21.92


$0.14 $0.05 $0.18 $40.99 $22.72

96374 Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); intravenous push, single or initial substance/drug

$0.13 $0.01 $0.14 $115.01 $57.26

96415 Chemotherapy administration, intravenous infusion technique; each additional hour $0.09 $0.05 $0.13 $56.79 $31.03




Unit CostAllowed Amount PMPM

Unit CostAllowed Amount PMPM


96409 Chemotherapy administration; intravenous, push technique, single or initial substance/drug

$0.04 $0.01 $0.05 $400.57 $164.50

90472 Immunization administration; each additional $0.00 $0.04 $0.04 $26.68 $15.76

96376 Intravenous push, single or initial substance/drug; each additional sequential intravenous push of the same substance/drug provided in a facility

$0.04 $0.00 $0.04 $100.83 $108.09

99602 Home infusion/specialty drug administration, per visit (up to 2 hours); each additional hour

$0.00 $0.00 $0.03 $55.44 $59.89

96402 Chemotherapy administration, subcutaneous or intramuscular; hormonal antineoplastic

$0.02 $0.00 $0.02 $232.87 $50.96

95115 Immunotherapy; one injection $0.00 $0.02 $0.02 $39.57 $12.99

96523 Irrigation of implanted venous access device for drug delivery systems $0.01 $0.00 $0.02 $134.55 $38.51

96368 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); concurrent infusion

$0.01 $0.00 $0.02 $140.52 $28.08

96450 Chemotherapy administration, into CNS (e.g., intrathecal), requiring and including spinal puncture

$0.01 $0.00 $0.01 $553.37 $334.61

90473 Immune administration oral/nasal $0.00 $0.01 $0.01 $26.56 $25.50

96521 Refilling and maintenance of portable pump $0.00 $0.01 $0.01 $406.44 $185.35

G0008 Administration of influenza virus vaccine $0.00 $0.01 $0.01 $41.89 $22.60

TOTAL (96413-G0008) $2.59 $2.17 $4.89


Commercial and Medicare Top Home Infusion Administration Codes by Allowed Amount PMPM, Unit Cost, and Line of Business

A35

Medicare Top Hospital and Physician Office Administration Codes by Allowed Amount PMPM, Unit Cost, and Site of Service (cont.)

A34 CONTINUED


96401 Chemotherapy administration, subcutaneous or intramuscular; non-hormonal anti-neoplastic $0.05 $0.07 $0.12 $112.81 $76.65

96417 Chemotherapy administration, intravenous infusion technique; each additional sequential infusion (different substance/drug), up to 1 hour

$0.06 $0.05 $0.11 $63.47 $67.89

96360 Intravenous infusion, hydration; initial, 31 minutes to 1 hour $0.06 $0.01 $0.08 $126.44 $58.79

G0008 Administration of influenza virus vaccine $0.00 $0.07 $0.07 $31.83 $22.20

96366 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); each additional hour

$0.05 $0.01 $0.07 $36.00 $20.35

96416 Chemotherapy administration, intravenous infusion technique; initiation of prolonged chemotherapy infusion (more than 8 hours), requiring use of a portable or implantable pump

$0.04 $0.03 $0.06 $317.89 $152.77

96409 Chemotherapy administration; intravenous, push technique, single or initial substance/drug $0.04 $0.02 $0.05 $182.96 $117.90

96523 Irrigation of implanted venous access device for drug delivery systems $0.04 $0.01 $0.05 $76.28 $26.74

96411 Chemotherapy administration; intravenous, push technique, each additional substance/drug $0.03 $0.02 $0.05 $61.76 $64.00

95165 Supervision of preparation and provision of antigens for allergen immunotherapy; single or multiple antigens (specify number of doses)

— $0.04 $0.04 — $13.09

G0009 Administration of pneumococcal vaccine $0.00 $0.04 $0.04 $41.69 $22.92

96402 Chemotherapy administration, subcutaneous or intramuscular; hormonal antineoplastic $0.01 $0.02 $0.03 $65.99 $34.20

90472 Immunization administration; each additional $0.00 $0.01 $0.01 $23.93 $12.18

95117 Immunotherapy injections $0.00 $0.01 $0.01 $31.48 $11.79

96376 Intravenous push, single or initial substance/drug; each additional sequential intravenous push of the same substance/drug provided in a facility

$0.01 — $0.01 $45.95 —

96521 Refilling and maintenance of portable pump $0.00 $0.00 $0.01 $143.55 $136.51

96368 Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); concurrent infusion

$0.00 $0.01 $0.01 $59.82 $19.45

TOTAL (96413-96368) $2.40 $1.52 $4.01

Commercial Medicare Commercial Medicare

CPT CODE CPT DESCRIPTION ALLOWED AMOUNT PMPM UNIT COST

99601 Home infusion/specialty drug administration, per visit (up to 2 hours) $0.08 $0.06 $117.75 $103.34

99602 Home infusion/specialty drug administration, per visit (up to 2 hours); each additional hour $0.03 $0.02 $52.59 $49.84

TOTAL $0.11 $0.08

Allowed Amount PMPM Unit Cost




ACA ........................................................... Affordable Care Act

ACO ............................................ accountable care organization

ACT ............................................................ adoptive cell transfer

ADR ............................................. administrative dispute resolution

ALL ................................................. acute lymphoblastic leukemia

APM ................................................... alternative payment model

ASCO .............................. American Society of Clinical Oncology

ASP ............................................................. average sales price

AWP .................................................... average wholesale price

BDAIDs ............................. biologic drugs for autoimmune disorders

CAR .................................................... chimeric antigen receptor

CBO .............................................. Congressional Budget Office

CD ................................................................... Crohn’s disease

CINV .......................... chemotherapy-induced nausea and vomiting

CLL ................................................. chronic lymphocytic leukemia

CMS ........................... Centers for Medicare & Medicaid Services

CMS Innovation Center .. Center for Medicare & Medicaid Innovation

CPT ............................................. Current Procedural Terminology

CSF ....................................................... colony-stimulating factor

EHR ........................................................ electronic health record

ESA .............................................. erythropoiesis-stimulating agent

FAIR ............................. Fair Accountability and Innovative Research

FDA ........................................ U.S. Food and Drug Administration

HA .................................................................... hyaluronic acid

HAE ...................................................... hereditary angioedema

HCPCS .................. Healthcare Common Procedure Coding System

HEC ......................................... highly emetogenic chemotherapy

HHS ...................... U.S. Department of Health and Human Services

HI/SPP ..................................... home infusion/specialty pharmacy

Hospital OP .................................................... hospital outpatient

HRSA ........................ Health Resources and Services Administration

ICD .................................... International Classification of Diseases

IDN ................................................... integrated delivery network

IG ................................................................... immune globulin

IL .............................................................................. interleukin

IV ............................................................................ intravenous

IVIG .................................................. Intravenous immune globulin

LEC .............................................. low emetogenic chemotherapy

LOB ................................................................... line of business

mAb .......................................................... monoclonal antibody

MACRA ..... Medicare Access and CHIP Reauthorization Act of 2015

MEC .................................. moderately emetogenic chemotherapy

MedPAC ......................... Medicare Payment Advisory Commission

MinEC ..................................... minimal emetogenic chemotherapy

MIPS................................... Merit-Based Incentive Payment System

MOA .......................................................... mechanism of action

NDC ......................................................... National Drug Code

NK ......................................................................... natural killer

NSCLC ................................................ non-small cell lung cancer

OCM ..................................................... Oncology Care Model

OIG ..................................... HHS Office of the Inspector General

OMB ..................................... Office of Management and Budget

PA ................................................................. prior authorization

Part D .................................... Medicare Prescription Drug Program

PCOP ................................... Patient-Centered Oncology: Payment

PD1 .................................................... programmed cell death 1

PD-L1 ............................................... programmed death-ligand 1

PI3K ......................................... phosphoinositide 3-kinase inhibitor

PLK1 ............................................................... polo-like kinase-1

PMPM ...................................................... per member per month

PPPY ............................................................ per patient per year

PSCE ....................................................... post-service claim edits

QPP ..................................................... Quality Payment Program

SCIG ............................................ Subcutaneous immune globulin

SLAMF7 .. signaling lymphocytic activation molecule family member 7

SMA....................................................... spinal muscular atrophy

SQ ...................................................................... subcutaneous

UC .................................................................... ulcerative colitis

VEGF ........................................ vascular endothelial growth factor

WAC .................................................. wholesale acquisition cost

Glossary



Notes

magellan rx management medical …...medical pharmacy allowed amount pmpm by lob by site of service...

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